This 13-year-old startup just got $100 million and is valued at over $1 billion - now it's taking on Amazon, Google, and Apple

• SoundHound has raised a $100 million funding round, led by Chinese tech giant Tencent. We've heard that it values the company at over $1 billion.
• The company has pivoted from a music identification app, into building out Houndify - a platform that lets companies quickly build their own voice assistants, like Apple's Siri or Amazon's Alexa.
• With this round, the company's roster of investors now includes Hyundai, Daimler, and European carrier Orange.
• The CEO of SoundHound tells us that it's building a strategic alliance of these kinds of big companies, providing them with an alternative to working with Amazon or Google.

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Chinese tech giant Tencent is leading a huge $100 million funding round for SoundHound, the startup announced on Wednesday.

Hyundai, Daimler, European carrier Orange, and Chinese appliance maker Midea are some of the other companies contributing to this sizable round. SoundHound did not disclose its valuation following this round, but a person familiar with the company says it's worth over $1 billion, making it a unicorn.

It's going to use those funds to go up against some of the biggest names in technology, including Apple, Amazon, and Google. SoundHound CEO Keyvan Mohajer tells us that he's not afraid of those 800-pound gorillas, though.

"We said, don't be afraid," said Mohajer. "I always tell my team members, think of your competitors are variables in a complex set of equations."

SoundHound used to be best known for its eponymous music-identifying app, but now its main product is called Houndify. Basically, Houndify lets any software developer quickly and easily build a voice assistant, using technology built by SoundHound over the 13 years since it was founded.

There are already several voice assistants, but Mohajer says that SoundHound is a better fit for integration with established brands who may be worried that the tech giants would "hijack their users."

"If you're Mercedes Benz, and you work very hard to create this really good brand, and you integrate Amazon Alexa in your Mercedes Benz, then your user has to log into an Amazon account when they buy the product, or they might have to create one, and they have to call your Mercedes Benz 'Alexa,' and the data goes to Amazon and there's no differentiation," Mohajer said.

But unlike Apple's Siri or Amazon's Alexa, developers can rename Houndify's assistant - so, in a hypothetical example, Hyundai could let its drivers summon their assistant by saying the brand name "Sonata," rather than invoke Amazon's Alexa.

"Big companies don't like to adopt these assistants made by Amazon and Google and Apple. They want to have their own, they want to customize, they want to differentiate, they want to keep their users," he continued. "The Houndify platform offers exactly that."

Strategic friends

This is the second large round SoundHound has raised that comes mainly from strategic partners - that is to say, companies that make money on their own - as opposed to financial vehicles like venture capital funds. In 2015, it raised money from Samsung, NVIDIA, HTC, and several other companies.

There's a good reason for that, Mohajer said. He's building an alliance of companies that may be worried about giants like Amazon or Apple eating their lunch.

In fact, he says his funding strategy is the opposite of Amazon's $100 million Alexa Fund, which funds small early-stage startups that are building out the market for the Alexa agent.

"Their response to us was the Alexa Fund, $100 million and basically they're gonna bribe companies to adopt the Alexa platform," Mohajer said.

Instead of investing in small companies, SoundHound wants big companies to invest in it. The idea started in 2015, when SoundHound released Houndify, and Amazon launched Alexa. They were competing for the same thing: People who wanted to build voice apps. To grab developers, Alexa started to give them money.

"We developed a strategy that was the reverse of Alexa Fund. So Alexa Fund gave $100 million to small startups that are not yet successful and hope that they will succeed. The Houndify alliance fund went to big companies that are already successful, that already have successful products, we let them invest in us, to encourage them to adopt the Houndify platform," he explained.

"If you think about it, Amazon cannot copy that idea!"

Now, Mohajer says that it actually had to fend off investors as it raised this round. The $100 million will go to opening new offices in China, Germany, and elsewhere.

"We actually wanted to raise less money, but we had so much interest," Mohajer said.

Even with those additional funds, it's not easy to take on Apple and Google, but it helps if you have some big friends.

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