Capacity, the St. Louis-based artificial intelligence software company led by serial entrepreneur and former Answers CEO David Karandish, is expanding with the purchase of another local startup.
Capacity said Thursday it has acquired text messaging software startup Textel in a deal the two companies said adds new technology to their products. Financial terms of the deal were not disclosed.
Founded in 2017 by Karandish and fellow entrepreneur Chris Sims, Capacity has developed an AI-enabled “help desk” technology that’s designed to capture and collect an organization’s information from various sources to automate support for employees or customers. Karandish said conversations with Textel, which has developed text messaging software for contact centers and businesses, began last summer and initially focused on a potential partnership before quickly turning to acquisition discussions.
“As we got to talking, it became pretty clear there could be some opportunities for the two companies to join together and have one plus one equal three or five or maybe 10,” Karandish said.
The combination of Textel and Capacity creates what Karandish described as a “peanut butter and jelly situation” in which both companies will be able to incorporate the other’s technology into their product offering. Capacity’s technology has been used through mobile, chat and email applications and this deal will enhance its ability to use text messaging, Karandish said. Textel will incorporate Capacity’s artificial intelligence and automation technology into its texting software.
“Textel has been helping to automate support for customer service and customer success teams via SMS. They didn’t have full-fledged AI and we didn’t have SMS as a big channel. Putting the two together makes a ton of sense,” Karandish said.
Textel will be a subsidiary of Capacity and continue to serve its 1,700-plus customers, Capacity said. It said Textel remain at its office at 1120 S. Sixth St., just south of downtown, in the near term and will eventually relocate to Capacity's office in the Delmar Loop. Textel, led by founder and CEO James Diel, in 2022 was named to the Inc. 5000 list of the nation's fastest-growing private companies, reporting revenue growth of 260% from 2018 to 2021. Investors in the company have included St. Louis-based venture capital firm Cultivation Capital, Denver-based Stout Street Capital and Capital Midwest Fund III.
The acquisition of Textel marks the latest growth initiative for Capacity, which in January 2022 announced it closed on a $38 million Series C funding round. Its headcount has grown to 100-plus, including the roughly 35 employees from Textel. Karandish said Capacity has had success landing customers in the financial services and health care industries and from businesses that offer appointment-based services.
In 2023, Karandish said Capacity will target investments in voice technology, but that its initial focus will be integrating Textel and its software into its operations.
“I’ve done a ton of acquisitions in my career. This is awesome to be able to complete one here in my hometown. It’s very exciting for St. Louis,” he said.
