Pamlico Capital has invested an undisclosed sum in 10th Magnitude, a Microsoft Azure consulting firm and managed services provider (MSP). The investment will support 10th Magnitude's strategic and geographic expansion -- while also funding potential acquisitions, the companies said.
While 10th Magnitude has pioneering the Azure cloud consulting market, the company is not yet an IT services giant. Annual revenues were $4.4 million in 2015, though they grew 287 percent over a three-year period, according to the 2016 Inc. 5000 results. Over the past six years, 10th Magnitude has delivered "hundreds of Azure consulting engagements for clients in the U.S. and around the world," the company asserts.
Where will 10th Magnitude grow from here? Key focus areas include managed cloud services -- a push beyond consulting to generate recurring revenues from Azure deployments. It's somewhat akin to Rackspace's strategy wrapping managed services around Azure, Amazon Web Services and other clouds. But 10th Magnitude also has DevOps and continuous delivery expertise -- similar to G2 Tech Group, an MSP focused on DevOps for SaaS customers that run on AWS.
Generally speaking, the MSP ecosystem for Amazon Web Services is a bit more mature than the Azure MSP ecosystem. Moreover, AWS consulting & MSP partners have been major acquisition targets in recent months.
Still, a growing number of MSPs are building Azure-centric business practices. True believes include Aldridge, which acquired Arterian and PacketDrivers as part of a Microsoft cloud consulting and services play in February 2016.
Who Owns What?
10th Magnitude CEO Alex Brown and the current management team will continue to manage the firm with support from Pamlico. 10th Magnitude will maintain "significant ownership" of the business. However, neither 10th Magnitude nor Pamlico Capital disclosed which company has majority ownership.
Pamlico Capital is a private equity firm focused on growing middle market companies. The company seeks growth equity and buyout investments of up to $100 million alongside proven management teams in business & technology services, among other industries.
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