Sierra, the AI startup co-founded by former Salesforce co-CEO and OpenAI chairman Bret Taylor, has achieved a valuation of $4.5 billion following a successful funding round.

What Happened: On Monday, a year after its public launch, Sierra raised $175 million in a funding round led by Greenoaks Capital, reported Reuters.

Thrive Capital and Iconiq also participated in the round. The company had previously raised $110 million from Sequoia Capital and Benchmark at a nearly $1 billion valuation.

Despite growing concerns around AI bubbles, the funding has positioned Sierra as one of the most highly valued startups. The company has surpassed $20 million in annualized revenue, the report noted, citing sources familiar with the matter.

This latest funding round values Sierra higher than established brands such as Nikon Corp. (OTC:NINOY) and Macy's, Inc. (NYSE:M), which have market capitalizations of $4.43 billion and $4.30 billion, respectively.

Co-founded by Taylor and Google veteran Clay Bavor, Sierra specializes in selling AI-powered customer service chatbots to enterprises. It serves clients such as WeightWatchers (NASDAQ:WW) and SiriusXM Holdings Inc (NASDAQ:SIRI).

Why It Matters: Sierra's skyrocketing valuation comes amidst a surge in funding for AI startups. For instance, earlier this month ChatGPT-parent OpenAI secured more than $6.5 billion in new funding at a valuation of $157 billion.

In March this year, Amazon.com, Inc. (NASDAQ:AMZN) announced an additional $2.75 billion investment in Anthropic. This follows an initial $1.25 billion investment from Amazon in September 2023, raising its total commitment to $4 billion.

At the time, the investment was made based on Anthropic's valuation of $18.4 billion.

In May 2024, Elon Musk's AI startup xAI raised a staggering $6 billion in its Series B funding round, pegging a reported valuation of $24 billion.

In July, Cohere Inc., backed by Nvidia Corporation (NASDAQ:NVDA) reached a $5.5 billion valuation becoming one of Canada's largest startups.