Scaleworks isn’t your typical venture company. The San Antonio-based private equity firm acquires startups with between $4 million and $10 million in annual run rate (ARR) and works to grow them, while additionally extending 12- to 16-month venture loans to B2B businesses as much as 6 times their monthly recurring revenue. Scaleworks bought eight companies with its first $60 million fund, which collectively grew 52% to $80 million in revenue last year. In February, it launched a second fund — this one totaling $80 million — to snatch up startups with greater than $4 million in ARR, and it announced one of the first acquisition targets today.
Scaleworks says it has acquired SearchSpring, a privately funded Colorado-based ecommerce company that provides AI-powered search and navigation products to direct-to-consumer brands like Moen, Kate Somerville, Volcom, Wet Seal, Natori, Bikini.com, Wildfox, Lime Crime, Wine Enthusiast, Charles & Colvard, SaintBernard Sports, and Bethesda Game Studios. Since its founding in 2007, SearchSpring says it has powered over 9.2 billion searches.
“After 11 years of operating independently as a bootstrapped company, SearchSpring will now have the backing of a team of technology veterans that share our passion for search, merchandising, and helping brands and retailers succeed online,” said CEO Gareth Dismore, who plans to leave the company. His replacement is Peter Messana, who previously spent time at Home Depot and GroupBy.
“While Amazon dominates ecommerce in many ways, the rise of the small direct-to-consumer player is a massive trend,” said Scaleworks general partner and cofounder Lew Moorman. “[SearchSpring] really hits all the key things we look for: great tech with opportunity to enhance the go-to-market approach, it’s a great size, and there is opportunity to specialize.”
SearchSpring’s platform — which integrates with Magento, Shopify, BigCommerce, and Mivaworks — works by ingesting companies’ catalogs, using natural language processing to break terms into their component pieces, and thoroughly indexing those pieces to suss out relationships among them. It’s able to tell the difference between a shirt dress and a dress shirt, for instance, and to correct typos and mistakes in search queries while quietly hiding irrelevant product types and accessories in results. Moreover, it optionally boosts products with the highest conversion rate to the top and captures shopping behavior to supplement product data.
SearchSpring joins recurring payments platform Chargify, content ingestion network provider Filestack, automated user research company Qualaroo, embedded analytics suite Keen, and office mail automation startup Earth Class Mail in Scaleworks’ growing portfolio. Among the firm’s successful exits to date are FollowUp, Mailgun, and Assembla.