Update: This story has been updated to reflect that ServiceNow says it is no longer in talks with Decagon.
Buzzy AI agent startup Decagon could be the latest company swept up in a growing wave of AI dealmaking.
The company, which was last valued at $4.5 billion earlier this year, has hired a bank to evaluate acquisition interest, according to people familiar with the matter.
Decagon held early discussions with cloud software giant ServiceNow, but a spokesperson for ServiceNow says they’re not ongoing. People familiar with the matter told Business Insider there have also been early talks with other companies; if a deal does not materialize, Decagon could instead raise a new funding round.
“Our approach to M&A has not changed: we remain an organic growth company first. M&A is a tool to accelerate our roadmap or open meaningful new innovation,” said Amit Zavery, president, chief product officer, and chief operating officer of ServiceNow.
The interest in Decagon represents a new shift in the AI boom: after years of huge venture rounds and soaring valuations, tech companies are increasingly looking to buy their way into promising AI markets. Hugging Face was recently acquired by Nvidia for 12.9 billion, and OpenRouter was snapped up by Stripe for around $8 billion.
Growing AI-related businesses are often getting offers at a significant premium to their last valuation, so if Decagon were to accept an offer, it could be considerably higher than its previous $4.5 billion value.
Founded in July 2023 by Jesse Zhang and Ashwin Sreenivas, Decagon uses generative AI to automate customer support for enterprise customers, including Delta, Snapchat, and Ticketmaster. The company has raised over $400 million from a roster of well-known Silicon Valley investors, including Andreessen Horowitz, Index Ventures, Bain Capital Ventures, and Accel. It competes with industry veteran Bret Taylor’s Sierra, which was valued at $15.8 billion earlier this year.
ServiceNow’s previous interest in Decagon came as it looked to reassure investors that it can adapt to AI’s threat to traditional software businesses. Its shares tumbled earlier this year during the so-called SaaS-pocalypse, when investors feared AI could erode software companies’ profit margins.
It was also punished for making a $7 billion acquisition of the security business Armis, a deal announced late last year. The stock has since rebounded by 55% in the past six months as ServiceNow continues to invest heavily in AI and reshape parts of its business.
