Yelp acquires AI lead management startup Hatch for $300M to accelerate transformation

Yelp to acquire AI lead management startup Hatch for up to $300M

Yelp Inc. announced today that it will buy Hatch, an artificial intelligence-powered lead management and communication platform provider, for up to $300 million. Under the terms of the deal, Yelp will initially pay $270 million in cash to acquire Hatch, plus up to $30 million more in employee retention payments subject to employees sticking around over two to three years. Founded in 2018, Hatch offers an AI-powered lead management and customer communication platform that helps service-oriented businesses connect with potential customers more effectively. The company's platform centralizes communication across text, email, voice and other channels to make it easier for teams to engage leads and retain customers. Hatch uses AI to automate and accelerate responses to incoming leads so businesses can engage prospective customers within seconds. The platform integrates with lead sources such as web forms and lead generators to ensure that no opportunity is missed and to help businesses get more appointments and drive higher returns on their marketing spend. The platform supports automated follow-ups across the customer journey to help businesses check in on estimates, answer questions and nurture relationships without placing more burden on human staff. For more hands-off support, Hatch offers AI-driven communication agents that can handle inbound and outbound interactions over voice, SMS and email, answering inquiries, booking appointments, screening spam calls and also rescheduling services. As of November, Hatch had $25 million in annual recurring revenue, representing a year-over-year annual recurring revenue growth rate of 70% at what is described as a "modestly negative cash flow." The acquisition will bring together Yelp's scale and brand with Hatch's lead management solutions to better position both companies to serve the evolving needs of service businesses as they embrace AI for growth. "The acquisition of Hatch is an important step forward in Yelp's AI transformation, accelerating our strategy to bring powerful new AI tools to local businesses," said Jeremy Stoppelman, Yelp's co-founder and chief executive officer. "Hatch is solving challenging lead management and communication pain points for services businesses and we've been impressed by the innovative AI technology and traction they've built. I believe that by bringing our companies together we will be able to help service providers operate and grow more efficiently." Coming into its acquisition, Hatch, formally Hatchify Inc., had raised around $13.7 million in venture capital funding, according to data from PitchBook. Investors in the company included Differential Ventures, Character Technologies Inc. and Tiferes Ventures. The acquisition is expected to close in early February, subject to customary closing conditions.

Yelp Purchasing AI Lead Management Platform Hatch for $300 Million | PYMNTS.com

The online business directory announced the deal Wednesday (Jan. 21), saying it would employ Hatch's lead management solutions to better assist service businesses as they adopt AI. "The acquisition of Hatch is an important step forward in Yelp's AI transformation, accelerating our strategy to bring powerful new AI tools to local businesses," Jeremy Stoppelman, Yelp's co-founder and CEO, said in a news release. "Hatch is solving challenging lead management and communication pain points for services businesses, and we've been impressed by the innovative AI technology and traction they've built. I believe that by bringing our companies together we will be able to help service providers operate and grow more efficiently." The release added that the agreement -- set to become final in early February -- will see Yelp acquire Hatch for roughly $270 million in cash with another $30 million of employee retention paid out in two to three years. Founded in 2018, Hatch says its offering lets businesses increase retention and improve customer communication with the help of conversational AI agents for SMS, email and phone call interactions. Yelp has been embracing artificial intelligence tools for the last few years, adding new AI-powered search capabilities in 2023 and AI-powered business summaries in 2024. "This is an incredible moment for Hatch," said Chris Bache, Hatch's co-founder and chief executive. "We've worked day in and day out to build something that truly helps our customers grow their businesses. I'm grateful to the Hatch team for all their work and dedication that brought us to this milestone. Joining Yelp means we can scale faster and help more businesses grow and succeed. The acquisition comes at a time when businesses are increasingly adopting agentic AI. As covered here Wednesday (Jan. 22), PYMNTS Intelligence research conducted last August showed that 52% of companies said they were just "considering" or "exploring" agentic AI. By November, that share had fallen to 30%. "In other words, a big chunk of the enterprise market moved out of the window-shopping phase," PYMNTS wrote. "What replaced the passive interest is hands-on implementation." In November, nearly a quarter of chief product officers said that they were either piloting agentic AI or fully using it in production processes, compared to just 3% in August. Actual usage and piloting were evenly divided: 12% said they were testing agents out, and another 12% have already incorporated them into their daily operations. "The upshot is that in just three months, the number of enterprises using or testing agentic AI spiked sevenfold," PYMNTS wrote.