Scaleworks Acquires SearchSpring for First Deal From Second Fund
San Antonio—Scaleworks is acquiring SearchSpring, a Denver, CO-based business that makes search and navigation systems for online stores and ecommerce businesses.
The acquisition is the first for Scaleworks’ $80 million second fund, which the San Antonio investment firm announced it had raised in February. Founded in 2016, Scaleworks branded its investment style as a mix of private equity and venture capital because it buys its targets outright like a private equity shop and will invest additional capital, if needed, to help a business grow, like a VC firm.
Scaleworks acquired eight businesses with its first $60 million fund, which it closed in 2017, and has subsequently sold two of them. It sold its stake in a third, Mailgun, to Thoma Bravo in April.
SearchSpring was founded in 2007 and has bootstrapped itself with private funding, Scaleworks said in a news release. Its founder and CEO, Gareth Dismore, isn’t staying with the company and will be replaced by Peter Messana, an Austin executive who has worked at various retail and ecommerce businesses, including GroupBy, Summit Sports, and Austin Kayak.
SearchSpring helps businesses of various sizes automate search and navigation for their e-commerce stores. Scaleworks said the company uses artificial intelligence and machine learning offer online shopping tools that small- to medium-sized businesses may not typically have access to. It also offers reporting and analytics services. The service starts at almost $500 per month, according to its website.
SearchSpring has almost 1,000 customers, including companies like Volcom, Wine Enthusiast, and Bethesda Game Studios. The company is approaching almost $10 million in annual recurring revenue, according to Scaleworks co-founder Lew Moorman. Scaleworks tends to acquire businesses with between $4 million and $10 million in revenue and moderate growth, working closely with the companies to bolster their operations.
The company has about 40 employees, who are based in Denver and remotely around the country. New hires will be based in San Antonio, where Messana is also moving, Scaleworks said.