David Carandish is a busy man.
His support automation company, Capacity, was planning a $5 million “bridge round” to help the company reach breakeven. But TVC Capital, Toloka.vc and the venture's other backers had grander plans in mind. So they put in another $21 million in Capacity's $26 million Series D.
While all this was happening, Capacity acquired three companies: enterprise search company Lucy (which raised $5.6 million) and two startups focused on customer service automation, Linc and Envision.
“Capacity is in an exciting period of transformation as we grow to help brands automate interactions with their customers and team members,” Karandish told TechCrunch. “We are at a tipping point in AI, and many companies are realizing that they need a complete platform to succeed, rather than a bunch of point solutions thrown together.”
Karandish co-founded Capacity with Chris Sims in 2017 as part of Equity.com's incubator program. After Answers.com (of which Karandish was a co-founder) exited for $900 million, Karandish wanted to start a business to address what he perceived as major inhibitors to customer service operations. He says he was there.
“Rising costs are putting pressure on support teams to do more with less,” says Karandish. “At the same time, consumer expectations are rapidly changing, with consumers wanting self-service but increasingly dissatisfied with lackluster experiences. Our Capacity goal is to It's about providing a great customer experience while recognizing that escalating to a human is the right thing to do.
Capacity connects to a company's technology stack to answer queries and automate support tasks. The platform mines information from files, apps like Gmail, customer relationship management software, and more to build a knowledge base from which Capacity's chatbots and helpdesk tools can draw.
Employees can also ask Capacity’s chatbot questions like “What was added to the merger agreement yesterday?” or direct actions like updating the status of a sales lead. Chatbots and help desks can also deliver company-wide announcements such as news and event notifications. You can also create these externally (with filters to hide sensitive data) and embed them on your company's website to answer common customer questions.
Image credit: Capacity
“We believe Capacity has the ease of use of a tool like Zendesk and the automation capabilities of ServiceNow,” said Karandish. “From an approach point of view, we are implementing a strategy very similar to Parker Conrad's 'composite model', except that our focus is on support. .”
Innovations in self-service software, including AI, are making self-service software a more attractive solution for businesses than ever before. For example, Cleverly.ai, which was acquired by Zendesk in August 2022, finds answers to customer questions by creating a knowledge layer on top of applications. Meanwhile, it directly leverages algorithms trained by domain experts to strategically answer customer questions across different messaging channels.
Customers prefer self-service options. According to a Zendesk poll, 67% of people say they prefer customer support over interactions with them. But getting them right can be difficult. According to Gartner research, on average, only 14% of customer service and support issues can be fully resolved through self-service.
Capacity upgrades and expands its product portfolio through recent acquisitions.
Karandish highlights Lucy's product, which ingests and analyzes data from enterprise apps and systems to enhance Capacity's existing indexing technology. Meanwhile, Envision helps Capacity customers flag unresolved chats and calls and train human agents. And Linc will bring self-service tools to Capacity for retail and e-commerce, Karandish said.
Under the plan, Lucy co-founders Dan Mallin, Scott Litman, and Marc Dispensa will join Capacity to lead the product and team integration. Envision CEO Rodney Kuhn will oversee Capacity's contact center solutions, and Linc founder and CEO Fang Cheng will lead Capacity's e-commerce efforts.
To date, Capacity has acquired eight companies, the other five being Textel, LumenVox, Denim Social, SmartAction, and Cereproc, and has raised over $89 million.
Carandisch said the latest portion will go toward increasing the number of employees to 200 by the end of the year, as the St. Louis-based company “aims toward profitability.” He added that Capacity's customer base now reaches more than 2,500 brands, with annual recurring revenue of nearly $50 million.
“Our growth strategy reflects what our customers want: an all-in-one AI platform that delivers across all communication channels,” he added. “We have identified 24 steps in the customer experience that are ripe for support automation. Each acquisition adds specific technology and talent, helping Capacity to leverage AI for customer and employee experience. It helps us become a leading provider of leveraged solutions.”