The entryway to the Scaleworks building.
The entryway to the Scaleworks building. Credit: Bonnie Arbittier / San Antonio Report

Three months after Scaleworks secured its second funding haul — an $80 million cache for expanding the venture equity fund’s roster of software companies — the Houston Street firm announced the first acquisition with the purchase of Denver-based SearchSpring.

SearchSpring is a privately funded tech company that uses artificial intelligence and algorithms to create advanced search and navigation features for online shops. Terms of the deal will not be disclosed.

“It really hits all the key things we look for,” Lew Moorman, co-founder and general partner at Scaleworks, said in a press release. “[SearchSpring has built] great tech with [an] opportunity to enhance the go-to market approach. It’s a great size, and there is opportunity to specialize.”

SearchSpring’s headquarters will remain in Denver, but newly named CEO Peter Messana already has moved to San Antonio to begin building a team in the city, a Scaleworks spokesman said. Scaleworks’ 122 E. Houston St. headquarters is home to seven previously purchased companies. The firm tapped Messana, a founder of outdoor sports retailer Austin Kayak and most recently the chief operations officer of e-commerce platform GroupBy, to replace founder and CEO Gareth Dismore.

Dismore reached out to Scaleworks when he was ready to move on from the company he led for 12 years, a Scaleworks spokesman said. He will aid in the company’s transition.

SearchSpring, which was founded in 2007, has more than 30 employees who work in Denver and Colorado Springs, according to LinkedIn.

Notable SearchSpring customers include clothing retailers Wet Seal and Volcom, and Wine Enthusiast. Some of SearchSpring’s clients make more than $100 million in online sales, according to information provided by Scaleworks. SearchSpring’s software powers features such as autocomplete that loads results while a user is typing based on the most likely search term. The company’s tools also can filter products by category and subcategory to give online shoppers more refined results based on the store’s inventory.

E-commerce sales have been on a steady incline since 2009, according to the U.S. Census Bureau. The bureau estimated U.S. online retail sales at $137.7 billion in the first quarter of 2019, which accounted for 10.2 percent of all sales. In the first quarter of 2009, e-commerce sales composed less than 4 percent of all retail sales in the U.S.

Online commerce is projected to grow to about $5 trillion in sales by 2021, according to the website Statista.

SearchSpring’s software-as-a-service rates start at about $500 a month and are aimed at larger e-commerce brands with at least $5 million in revenue and 500 products.

JJ Velasquez

JJ Velasquez

JJ Velasquez was a columnist, former editor and reporter at the San Antonio Report.