Interactions Corp. collects $40 million in new funding to make customer service calls less frustrating

By Scott Kirsner, Globe Columnist

Big new round of funding being announced today by a Franklin-based startup, Interactions Corp. And it’s being led by Steve Murray, a venture capitalist based in the Newton office of Softbank Capital.

Interactions Corp. helps about 22 big customers, including Hyatt and Humana, handle incoming phone calls more efficiently, without requiring callers to press 2 for billing, 3 for sales, or * to go back to the previous menu. But it also doesn’t rely entirely on speech recognition, which can often run into trouble, especially when interpreting phrases or full sentences. Instead, Interactions layers human assistance on top of automated speech recognition when necessary. If there's a lot of background noise, or the caller has a thick accent, a human listens to that fragment of the conversation and routes the caller to the right place. The company calls its solution the "Virtual Assistant"; you can listen to some examples here.

Interactions has about 80 employees at its headquarters in Franklin, and it plans to open up a second local office on Lincoln Street in downtown Boston next month. “There’s a certain group of employees that we’ll have greater access to in that location,” says CEO Mike Iacobucci, right. With the new funding, Iacobucci says he’ll be hiring across pretty much every function, including engineering, sales, marketing, and client services. The company also has offices in Indianapolis and Austin.

Iacobucci says that Interactions has “done really well” penetrating the hospitality market, where clients include Hyatt and Best Western, and that other customers come from industries like telecom, retail, and healthcare. As for this new round of funding, he says, the investors "felt we had sufficient traction," and Iacobucci felt "it was time to expand the businesses." The other VC firms participating in this round are Sigma Partners and Sigma Prime Ventures of Boston; Updata Partners; North Hill Venture Partners of Boston; Cross Atlantic Capital Partners; and RED LLC.

In April, Interactions announced a partnership with AT&T to use the company’s Watson speech technology as part of its offering. I last covered the company in 2010.