David Karandish has been busy.
His support automation company, Capacity, was planning a $5 million “bridge round” to help the company break even. But TVC Capital, Toloka.vc and the venture’s other backers had something grander in mind. So they put in an additional $21 million in a Series D of $26 million in capacity.
While all of this was going on, Capacity acquired three companies, including enterprise search company Lucy (which raised $5.6 million) and Linc and Envision, two startups focused on customer service automation.
“It’s an exciting time of change in capacity as brands grow to be able to do more to automate interactions with customers and team members,” Karandish told TechCrunch. “We are at an inflection point in AI, and many companies are realizing that success requires a complete platform rather than a patchwork of point solutions.”
Karandish co-founded Capacity with Chris Sims in 2017 as part of the Equity.com incubator program. After Answers.com, which Karandish co-founded, was sold for $900 million, Karandish said he wanted to start a business to solve what he perceived as major bottlenecks in customer service operations.
“Rising costs are putting pressure on support teams to do more with less,” said Karandish. “At the same time, consumer expectations are rapidly changing to one where consumers want self-service but are increasingly frustrated by unsatisfactory experiences. Our goal for capacity is to deliver a great customer experience while recognizing that escalating to humans is often the right thing to do.”
The capacity connects to the company’s technology stack to answer queries and automate support tasks. The platform collects information from files, apps like Gmail, customer relationship management software, and more to build a knowledge base that capable chatbots and helpdesk tools can pull from.
Employees can also ask Capacity’s chatbot questions, such as “What was added to the merger agreement yesterday?” or instruct it to perform tasks, such as updating the status of a sales lead. Chatbots and helpdesks can also deliver company-wide announcements such as news and event notifications. They can also be made externally visible (with filters to hide sensitive data) by embedding them on your company’s website to answer common customer questions.
“We believe the capacity comes with the automation capabilities of ServiceNow along with the ease of use of tools like Zendesk,” Karandish said. “From an approach perspective, we are running a very similar playbook to Parker Conrad’s ‘composite model’, except in our case the focus is on support.”
Innovations in self-service software, including AI, have made AI a more attractive solution for businesses than in the past. For example, Cleverly.ai, which Zendesk acquired in August 2022, creates a knowledge layer on top of its applications to find answers to customers’ questions. Meanwhile, we leverage algorithms directly trained by subject matter experts to strategically answer customer issues across a variety of messaging channels.
Customers love self-service options. According to a Zendesk poll, 67% prefer Zendesk over interacting with customer support. But getting them right can be difficult. Gartner research shows that, on average, only 14% of customer service and support issues are fully resolved through self-service.
Capacity will upgrade and expand its product portfolio through recent acquisitions.
Karandish sees Lucy’s product augmenting Capa’s existing indexing technology by collecting and analyzing data from enterprise apps and systems. Meanwhile, Envision will help capacity customers flag unresolved chats and calls and train agents. And Linc will introduce self-service tools for retail and e-commerce in its capacity, Karandish said.
The plan is for Lucy’s co-founders Dan Mallin, Scott Litman and Marc Dispensa to join. Ability to help integrate leading products and teams. 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.
Capacity has been obtained to date. eight The remaining five companies – Textel, LumenVox, Denim Social, SmartAction and Cereproc – raised more than $89 million.
Karandish said the latest tranche will go toward increasing Capacity’s headcount to 200 by the end of the year as the St. Louis-based company “moves toward profitability.” He added that the customer base at current capacity spans over 2,500 brands and annual recurring revenue of nearly $50 million.
“Our growth strategy reflects what our customers are demanding: an all-in-one AI platform delivered across all communication channels,” he added. “We have identified 24 stages of the customer experience that are suitable for support automation. Each acquisition adds specific skills and talent, enabling our capacity to become a leading provider of AI-based solutions for customer and employee experiences.”
