Sources: Decagon, which offers AI customer service agents and was last valued at $4.5B, hired a bank and is in early talks with buyers, including ServiceNow (Katie Roof/Business Insider)

On the second day of Web Summit 2025 in Lisbon, Portugal, AI startup Decagon AI was in the spotlight with its co-founder and CEO, Jesse Zhang. Decagon constructs AI agents to automate customer support for large enterprises, having garnered over $400 million in funding from notable investors like Andreessen Horowitz and Accel. The company recently hired an investment bank to assess potential M&A interest, with preliminary talks involving tech giants such as ServiceNow.

Decagon's valuation was last reported at $4.5 billion earlier this year. While the company might pursue a funding round if a deal falls through, the interest in Decagon reflects a shift in the AI boom where companies are increasingly acquiring promising AI markets. Recent examples include Hugging Face's acquisition by Nvidia for $12.9 billion and OpenRouter's sale to Stripe for around $8 billion.

With these attractive offers at a significant premium, Decagon's value could surpass its previous $4.5 billion valuation if it accepts an offer. Founded in July 2023 by Zhang and Ashwin Sreenivas, Decagon utilizes generative AI to automate customer support for enterprise clients, including Delta, Snapchat, and Ticketmaster. The acquisition would benefit ServiceNow, which seeks to reassure investors of its ability to adapt to AI's potential threat to traditional software businesses.

Following a SaaS-pocalypse earlier this year, when AI was feared to erode software companies' profits, ServiceNow's stock recovered after the firm intensified its AI investments and restructured certain aspects of its business.