ParLevel Systems, founded 10 years ago by two recent college graduates with a rent-free office at Geekdom, sold earlier this summer to 365 Retail Markets in a deal worth tens of millions of dollars, according to a ParLevel investor.
In San Antonio’s tight-knit startup community, rumors have swirled for weeks that the venture born and raised entirely within Geekdom — downtown’s startup incubator and the anchor of its nascent tech district — had sold for an outsized return. But ParLevel’s executives have stayed silent about the deal; numerous attempts by the San Antonio Report to contact leadership at the company were unsuccessful. Exact terms of the deal are not known.
ParLevel sells a set of software and hardware tools for vending machines, automatic kiosks and other parts of the “unattended retail industry,” as it calls its sector on its website.
“This represents the exact kind of win we’ve been looking to create more of in our ecosystem,” said Tech Bloc CEO David Heard, who advocates for the tech sector in the city. “This is homegrown, locally funded, and had a nice return years later.”
The sale signals a success for Geekdom in particular, which since 2011 has sought to create a pipeline for startups that carries them from idea conception to the sale of a mature enterprise.
“This is the grand slam,” said Nick Longo, a tech entrepreneur who co-founded Geekdom with Graham Weston, a downtown developer who also helped found Rackspace. “Graham and I are giddy. We could not be happier about this outcome.”
Longo confirmed the deal was a substantial sum worth “tens of millions of dollars.”
The buyer, 365 Retail Markets, is an industry giant in the world of self-service retail. Headquartered in Michigan but with offices across the country, it has recently embarked on a buying spree of retail technology companies based in Australia, Scotland and across the globe.
Longo said ParLevel’s success confirms the hypothesis he and Weston had when they began Geekdom, which combines a co-working space in the Rand Building on Houston Street with accelerator and incubator programs. “We had the gut feeling that if you took a bunch of people and put them in one space, they would make great stuff,” Longo said. “And that’s what happened.”
Charles Woodin, Geekdom’s CEO, didn’t know the specifics of the deal. “But if it’s as big as I’ve heard, this is amazing,” he said. “This is a company that took the exact prescriptive path we have for new ideas.”
It also had a special nudge in Geekdom’s early days.
ParLevel’s founders, Luis Gonzalez and Walter Teele, met at a “3 Day Startup Weekend” event at Geekdom, shortly after graduating from UTSA and Trinity University, respectively. The event, a partnership with Trinity, had a few dozen, mostly young, contestants split into various teams to spend the next 72 hours trying to build a company proposal from scratch. Selected finalists pitched their concepts to local investors and business leaders.
Gonzalez and Teele did not win. Their idea was “not very good,” Longo said — he recalled it was a fitness dance app — but their energy and drive were apparent. So he offered them a rent-free office at Geekdom for a year, “just to see what they would come up with.”
Inspiration came one day from a vending machine in the building.
Gonzalez recalled that his uncle in Mexico who owned vending machines was frustrated that he didn’t have a way to tell what was in his machines and whether they were working without physically visiting each one of them, as he later told local media.
Longo said the recent graduates wondered aloud if the building’s vending machine could be hooked up to the internet and send text notifications when it was empty. Longo gave them permission to tear apart the machine and see what they could do. He also allowed them to drill a hole in the ceiling so they could connect the machine’s circuitry to the building’s network.
Using the Geekdom vending machine as a case study, the early ParLevel team built a module that allowed the machine to send real-time notifications and statistics to the internet, and which could easily be added to the vast majority of existing vending machines. Gonzalez and Teele quickly added a vending machine operator, Alan Munson, to their team.
“I remember these guys sitting and soldering boards in the Geekdom hardware room,” said Luis Martinez, the director of Trinity University’s Center for Innovation and Entrepreneurship. “They were 3D printing parts out, trying to figure out how to connect the circuitry to the internet through Wi-Fi or Bluetooth.”
While that initial proof-of-concept was fun, Longo said, “what it turned into was massive.”
The venture snowballed into a logistics company that allowed vending businesses to use a central dashboard showing rows and rows of vending machines with real-time data and statistics on what was selling well, what machines were broken and even what routes suppliers needed to drive to between machine locations.
Years later the company branched into automated retail kiosks, selling them to hotels, convention centers and schools.
“They went from being a couple of college kids from Mexico to having a two-sided vending business with 50 to 60 employees,” Longo said.
Gonzalez is the company’s CEO; Teele left the company in 2015.
Along the way, ParLevel took advantage of numerous funding opportunities, including $25,000 from Geekdom as one of the first recipients of its community fund. It also participated in the Techstars accelerator program — no longer offered in San Antonio — and raised at least $2 million from investors. Longo also offered his mentorship in exchange for a stake in the company.
ParLevel is not the first company to attract a buyer’s attention after spending time at Geekdom. Others include Flightpath Finance, Promoter.io, Mobile Tech RX, Open Cloud Academy and Biltt. However, Woodin said, ParLevel’s acquisition would be a “pillar of their own” because of its scale.
But while many leaders are in the tech sector are celebrating — even if they don’t fully know the details — others are already looking ahead.
“How do we get 10 times more of these stories?” Heard said.
