MSPs and Venture Capital: Electric Raises $90M to Automate SMB IT Support

Electric, a New York-based MSP that also develops its own automation software, has raised $90 million in Series D funding. Every dollar raised in the round involved existing investors — which suggests venture capital firms are impressed with MSP’s business model and industry traction. Still, Electric’s business valuation for the Series D funding round was not disclosed.

Ryan Denehy, CEO, Electric

Electric will use the funding for product development, customers service, partner expansion, ecosystem integrations, and more proactive tools for “customers to efficiently manage employees, networks, devices and applications,” the MSP said in the funding announcement.

While traditional MSPs often remotely manage customer networks, servers and notebooks, Electric emphasizes the need to manage SaaS applications for SMBs. Indeed, the typical business now runs 88 different SaaS applications, according to Okta’s Business At Work report for 2021. Amid that SaaS complexity, Electric claims to simplify IT for small businesses, “giving them a single platform to view, purchase and manage their entire IT infrastructure, as well as real-time support to free them from daily IT tasks that drain resources,” the MSP said.

The overall MSP market is warming up to that SaaS management message. Indeed, upstarts such as Augmentt and SaaS Alerts (among others) are popping up to offer their own SaaS management, monitoring and/or security tools for MSPs.

In addition to building its own software, Electric leverages commercial IT management, monitoring and automation tools from Cisco Meraki, Jamf, Kaseya, Slack and Ubiquiti Networks.

Electric Expansion: Key MSP Business and Financial Metrics

Meanwhile, Electric has been in expansion mode. The company’s annual recurring revenue (ARR) has grown 111 percent over the past 12 months, though ChannelE2E doesn’t know actual dollar figures for revenue, EBITDA or net income. Also, the MSP now has 444 employees, up 183 percent over the past year. Some of the growth involves acquisitions — including buying Techvera in September 2021 and Sinu in November 2020.

Jeff Richards, managing partner, GGV Capital.

Roll all the moves together, and Electric now supports over 700 customers and 40,000 end users, the MSP said.

Venture capitalists appear impressed with Electric’s momentum. Existing investor GGV Capital led the Series D round, with participation from existing investors Bessemer Venture Partners, Primary Venture Partners, Greenspring Associates, 01 Advisors, Atreides Management, Vintage Investment Partners and Slack.

In a prepared statement about the funding, Electric CEO and Founder Ryan Denehy said:

“We’re focused on building a company that can lead the market for a very long time. Our existing investors share that vision, so we were thrilled to be able to complete the Series D without bringing on any new capital partners. It’s a testament to the belief everyone around the table has in our technology and Electric’s future.”

Added Jeff Richards, managing partner at GGV Capital:

“We’ve been lucky to watch Ryan and his team build Electric from the Series B and are thrilled to be more than doubling down to lead this new round of financing.”

Amid that praise and the various business milestones, we just want to repeat: ChannelE2E does not know Electric’s actual revenues or balance sheet figures, so it’s difficult for us to truly pinpoint the company’s financial standing.

MSP Funding: Venture Capital vs. Private Equity

It’s also important to note the difference between venture capital and private equity in the MSP sector — particularly as it pertains to IT service providers.

For the most part, private equity firms acquire “platform” MSPs (large service providers), and then acquire and tuck smaller MSPs into that business. The private equity dollars are typically used to fund buyouts, some executive ownership exits, integration strategies, and talent expansion. (See hundreds of private equity investments in MSPs listed here.)

In contrast, venture capital firms occasionally invest in MSPs to help fund a mix of R&D (research and development) along with acquisitions, and rarely involve MSP owner exits. Electric is a key example of that VC-funding MSP journey.

Return Home

No Comments

Leave a Reply

Your email address will not be published. Required fields are marked *