Support automation company Capacity expands through fresh funding and strategic acquisitions.

David Karandish hasn't had much free time lately.
Support automation company Capacity expands through fresh funding and strategic acquisitions.

David Karandish hasn't had much free time lately.

The support automation company he founded, Capacity, was planning a $5 million "bridge round" to help get the company to the break-even point. But TVC Capital, Toloka.vc, and the venture's other investors had something much bigger in mind. So they added another $21 million to make what became Capacity's $26 million Series D.

While all this was going on, Capacity acquired three companies: enterprise search firm Lucy - which had raised $5.6 million - and two startups focused on customer service automation, Linc and Envision.

"It is an exciting time of transformation at Capacity as we grow to help brands do more to automate interactions with customers and team members," Karandish told TechCrunch. "We are at an inflection point for AI, and many businesses realize they actually need a complete platform, not cobble together a bunch of point solutions."

Karandish co-founded Capacity in 2017 with Chris Sims in the incubator program of Equity.com. Karandish says he wanted to start a business to address what he perceived were massive blockers in customer service operations after the exit of Answers.com for $900 million, in which Karandish also co-founded.

"Rising costs are putting pressure on support teams to do more with less, explains Karandish. Consumer expectations are changing rapidly, though, where consumers want both self-service but grow increasingly frustrated by lackluster experiences. Our goal with Capacity is to provide a great customer experience but also make clear that escalating to a human is the right thing to do in many cases."

Capacity connects to a company's tech stack to answer queries and automate support tasks. This platform mines information from files, apps like Gmail, customer relationship management software, and more to build a knowledge base that Capacity's chatbot and helpdesk tools can pull from.

The capacity chatbot can be asked anything from "What was added to the merger contract yesterday?" to updating a sales lead's status. That's just the starting point-the chatbot and the helpdesk can also make announcements to a company-wide level, including news and event notifications. And they can be made external-facing (with filters to hide sensitive data, mind you), embedded on a company's website to answer common customer questions.

"We view Capacity as having the ease-of-use of a tool like Zendesk with the automation chops of a ServiceNow," Karandish said. "From an approach standpoint, we are executing a very similar playbook to Parker Conrad's 'compound model' — except in our case, we're focused on support."

Innovations in self-service software — including AI — are making them a more attractive solution to companies than they have been in the past. For example, Cleverly.ai — which Zendesk acquired in August 2022 — finds answers to customers' questions by creating a knowledge layer on top of applications. Meanwhile, Directly taps algorithms trained by subject-matter experts to strategically answer customer issues in a variety of different messaging channels.

Customers like self-service. Though in a Zendesk survey, 67% mentioned that they would be interested in using self-service more than dealing with support customers, it is quite difficult to get it right. As a Gartner study suggests, on an average only about 14% of customer service and support issues are completely getting resolved through self-service.

Through its latest acquisitions, the product portfolio of capacity will increase.

Karandish described it this way: "Lucy is one to ingest and analyze data from enterprise applications and systems to complement the indexing technology that Capacity already has in place. Envision will help Capacity customers identify groups of unraveled chats and calls and, subsequently, train a human agent. And Linc self-service tools for retail and e-commerce come to Capacity," said Karandish.

Co-founders of Lucy, Dan Mallin, Scott Litman, and Marc Dispensa, will join Capacity to help lead products and teams integration. Envision CEO Rodney Kuhn will oversee contact center solutions at Capacity while Linc founder and CEO Fang Cheng will lead e-commerce efforts at Capacity.

So far, Capacity has acquired eight companies: five of them are the rest from Textel, LumenVox, Denim Social, SmartAction, and Cereproc; it has raised over $89 million.

The newest tranche is going toward growing the head count of the Saint Louis-based Capacity to 200 people by year's end as the company "heads toward profitability," according to Karandish. To date, 2,500 brands form Capacity's customer base, with its annual recurring revenue nearing $50 million, he added.

"We know that the various touch points in our customers' journeys are what are most under the radar of support teams today," he added. "Our growth strategy reflects what our customers are asking for: an all-in-one AI platform that delivers across all communication channels." He also said that there are 24 steps of the customer experience ripe for support automation …. Each acquisition adds specific tech and talent to help Capacity become a leading provider of AI-powered solutions for customer and employee experience.

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2024-10-16 18:25:54