AI Search Startup SearchSpring Sold To Scaleworks

Scaleworks, a private equity firm focused on acquiring startups, inked a deal to acquire SearchSpring, an artificial intelligence (AI) eCommerce company.

VentureBeat, citing Scaleworks, reported the PE firm typically goes after startups that have an annual run rate of between $4 million and $10 million. The PE firm also extends short term venture loans to B2B companies. The undisclosed-price acquisition represents the first one for Scalework's $80 million second fund. The PE firm purchased eight businesses with its first $60 million fund, noted the report.

SearchSpring is an AI-powered search engine that drives shoppers to direct-to-consumer (DTC) brands. The company says it powered more than 9.2 billion searches, according to the report. “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,” CEO Gareth Dismore said in the report, which noted Dismore is exiting the company and will be replaced by Peter Messana, formerly of Home Depot and GroupBy.

Scaleworks is betting the market for DTC brands will take off in a big way. Lew Moorman, general partner and co-founder of Scaleworks, told the news outlet that the rise of the small DTC company is a "massive trend" and that SearchSpring has the necessary technology, size and opportunity.

The trouble with DTC brands has been the difficulty in reaching the consumer. This is particularly hard for unknown and emerging brands, and it gets exponentially harder the more crowded the field gets with competitors. When so many firms are trying to reach the consumer directly, it is hard for any individual brand to make itself stand out, and that is where companies like SearchSpring come in. Its search and navigation systems for online stores make it easier for consumers.  In addition to using AI and machine learning to power searches, it provides eCommerce companies with analytics.