MSP-centric venture capital firm sets up shop in Canada

Stock ChartTechnology Capital Investors, a firm focused on working with managed service providers, has made its first move into the Canadian market with a location in Toronto. Now it’s looking to build up a group of Canadian MSPs to add to its network in the U.S.

TCI started investing in MSPs after coming to the realization that are in demand, but that “MSPs are a very difficult business to scale,” said Sam Attias, managing partner at TCI.

“Today, there are less than three per cent of the managed services community north of $10 million per month in ,” Attias said. “If you want to get to those numbers, organic growth is very difficult given when you need to get there.”

Today, it holds in its portfolio some 10 U.S.-based managed service providers, and it’s looking to build up a similar collection in Canada, with initial focuses in Ottawa, Toronto, Winnipeg, Calgary, Edmonton and Vancouver. It may look at multiple partners in some markets assuming it can find interested parties that are working in different verticals.

The company takes a “helping hand” approach to working with managed services providers, Attias said. Rather than bringing them all into the same framework, or even rebranding them all under the same banner, organizations continue to focus on their own brands, in their own regions, with their own strategies for growth. The company looks to support that strategy and “putt he resources in place to help create” that growth. Typically, the company likes for the MSP’s management team to stay in place after it takes an equity stake.

“We don’t look to buy client lists and roll a bunch of companies into one,” Attias said.

Because of that approach, there aren’t necessarily a lot of commonalities among MSPs under the TCI umbrella. That said, the company is looking for MSPs with a background in and solutions, and “have an engine that can grow.”

There are a few other things that TCI looks for in an acquisition target, according to its Web site:

  • Vertically focused
  • Strong regional brand
  • Owners looking to grow with TCI
  • Experience with , [Microsoft Office] 365 and or PBX
  • Appetite to expand and consolidate regional markets
  • $1.5 to $10 million in annual revenue
  • High degree of recurring revenue
  • Strong customer base

For Attias, Canada – with a few major markets like Toronto and Vancouver, as well as major growth opportunities like the Albert Oilsands – represents a significant growth opportunity, and he feels it’s the right time to start investing in the Canadian MSP community.

He said the company tends to work fairly closely with would-be acquisitions even before the deal is signed, but that “not very much changes on day one.”

Rather, the MSP continues to go about its strategy, and TCI starts working with the partner to build up a plan for the remainder of the year and beyond.

“We agree on a plan and a strategy, and then we put the resources in place to help affect them,” he said. That typically includes building up sales and capabilities for the member MSPs.

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