Oct 28 (Reuters) - Sierra, a software startup co-founded

by former Salesforce co-CEO Bret Taylor, has raised $175

million in a new funding round led by Greenoaks Capital that

gave it a $4.5 billion valuation, the company said on Monday.

The funding round comes less than a year after the public

launch of the young AI startup by Taylor, one of the most

closely watched entrepreneurs in Silicon Valley.

The company previously raised $110 million from Sequoia

Capital and Benchmark at a nearly $1 billion valuation.

Thrive Capital and Iconiq also participated in the round.

The funding has established Sierra as one of the most highly

valued AI startups, despite growing concerns around AI bubbles.

The company has crossed $20 million in annualized revenue,

sources familiar with the matter told Reuters.

A huge valuation at an early-stage startup is usually based

on the company's growth potential and investor's interest in the

category and founding team.

The major jump in valuation signals appetite to pay high

multiples to back AI companies by established founders. The

Information earlier reported on the funding talks.

One-year-old Sierra focuses on selling artificial

intelligence-powered customer service chatbots to enterprises.

It serves clients such as WeightWatchers and Sirius XM

.

Since OpenAI's ChatGPT burst on to the scene, investors'

interest in funding the technology has gradually shifted from

funding expensive foundational models into applications selling

to enterprises that generate steady revenue.

Founded by Taylor and longtime Google executive Clay Bavor,

Sierra AI enters a crowded space of AI-powered customer service

solutions, which includes giants like Salesforce and startups

like Forethought.

Sierra says it differentiated itself by reducing

"hallucinations", a common issue in which large language models

generate false information, so brands can trust the AI agent to

interact with customers.

Sierra is the latest venture by Taylor, who gained

prominence in Silicon Valley through his leadership roles at

Salesforce. He also serves as chairman of the board at OpenAI,

and has previously downplayed the competition between OpenAI,

which aims to build artificial intelligence, and Sierra.

Taylor, who oversaw the Twitter board throughout the

high-profile takeover by Elon Musk, was previously seen as a

likely successor to Salesforce CEO Marc Benioff before

announcing his departure to return to entrepreneurial ventures.

His co-founder Clay Bavor joined Google in 2005 and held

significant roles, including managing Gmail and Google Drive.