Retail tech company Xcite Automotive plans to raise venture capital after AI acquisition

Xcite Automotive, known for reconditioning vehicles and photographing them for dealer websites, has acquired Double4 AI, a company focused on artificial intelligence-driven products and services.

The acquisition of Double4 AI is designed to help Xcite offer complete retail technology and services in-house rather than through outside technology vendor partnerships, CEO Phil Penton said. He declined to disclose the purchase price, but said the deal was worth eight figures.

Xcite also has begun a process to raise more than $50 million in venture capital for the first time since its 2007 launch. The funding will fuel further technology acquisitions and an international expansion, Penton said.

"We were just a services company and now we're transitioning into a technology company," Penton said.

Including Double4 AI, Xcite has made six technology-focused acquisitions in the last five years, Penton said.

Xcite, of Chicago, employees 1,340 people and its technology is embedded in more than 7,000 U.S. dealerships. Its customers include AutoNation, Lithia, Hertz and Avis, Penton said. Beyond Chicago, it also maintains offices in Buffalo, N.Y.; Baltimore; Tampa, Fla., and in India, among other locations. Employees include photographers, detailers, paint and body professionals, and software developers. Xcite has been known for reconditioning vehicles and photographing them to help dealerships place them online quickly.

Double4 AI, with locations in Texas, Iowa and India, specialized in using cloud-hosted, deep learning AI to help dealerships modify vehicle photos quickly and at scale, according to the company's Facebook page. It employed 73 people, including 70 technology developers, all of whom will be absorbed into Xcite, Penton said.

The acquisition will enable Xcite to launch new products focused on enhancing dealership operations and customer experience. These new offerings include a product designed to let shoppers virtually explore vehicles inside and out, video content creation tools to showcase inventory and enhance SEO performance, and AI-driven products focused on quality assurance and damage detection. Xcite said four new patents from Double4 AI will lead to new products that help improve inventory turnover rates.

In addition, Xcite will incorporate AI into its Frontline Inventory platform to help dealers streamline their inventory management more efficiently.

Penton said Xcite's venture capital fundraiser just started and could take six to 18 months. Xcite is profitable and has been bootstrapped until this point, Penton said.

"We built this company without taking any funding," Penton said.

Now it is growing in a new direction, adding technology to complement its services. Penton said it makes Xcite feel like a new operation even though it's been around so long.

"In some ways I look at us as a startup even though we do have over 1,300 employees," Penton said.