Berkshire Partners has invested in Upstack, a startup IT advisory firm that doesn't quite fit into the traditional MSP, IT consulting, agency or cloud services categories.
Financial terms of the investment were not disclosed, though background chatter indicates the investment was worth $50 million.
Originally known as a colocation marketplace, Upstack helps customers to "streamline and optimize the entire IT procurement experience." To be clear, Upstack does not position itself as a master agency or distributor. Rather, the company positions itself as a sales agency. With that positioning in mind, Upstack works with master agents and distributors to help customers select and activate a range of IT services -- including colocation, network connectivity, SD-WAN, unified communications, cloud, mobile, IoT and business connectivity solutions.
Upstack's platform allows business technology buyers and advisors to "design and compare cloud and Internet infrastructure solutions. Its technology consists of a set of tools that automate many of the most time-consuming components of designing and sourcing IT solutions, saving its Advisors and end-customers significant amounts of time relative to current modes of manual data extraction, input, comparison and presentation," the company says.
Still, Upstack's business model involves more than a Web-based technology comparison/procurement platform. The other key piece of the business involves Upstack Advisors -- who are "proven cloud and internet infrastructure solutions experts who have built successful consulting agencies serving organizations of all sizes." To build out that Advisor network, Upstack has acquired 10 independent agencies to date, with more acquisitions expected. (ChannelE2E is checking to see whether Upstack has disclosed the acquired agency names.)
Upstack, founded in 2017, has completed more than 1,000 data center, connectivity and cloud-based projects. The company says it continues to seek investments in category-leading telecom, cloud and connectivity firms.
Upstack and Berkshire Partners: Executive Perspectives
Describing the Berkshire-Upstack relationship, Upstack CEO Christopher Trapp said:
"Upstack was founded to bring enterprise-grade advisory services to businesses of all sizes. Berkshire's expertise in the data center, connectivity and managed services sectors aligns well with our commitment to enabling and empowering a world-class ecosystem of technology solutions advisors with a platform that delivers higher value to their customers."
Added Josh Johnson, principal at Berkshire Partners:
"Upstack has quickly become a leader in a large, rapidly growing and highly fragmented market. Our experience has reinforced the importance of the agent channel to enterprises designing and procuring digital infrastructure. Upstack's platform accelerates this digital transformation by helping its advisors better serve their enterprise customers. We look forward to supporting Upstack's continued growth through M&A and further investment in the platform."
Berkshire Partners: Key IT Services Investments
Berkshire Partners has considerable experience investing in and around the IT services provider market. The private equity firm typically invests $100 million to $1 billion in each of its portfolio companies. Investment targets typically have revenues of $100 million or more and EBITDA (earnings before interest, taxes, depreciation and amortization) of $20 million or more.
Within the technology services sector, noteworthy Berkshire Partners investments include:
- AHEAD, a Top 250 public cloud MSP that recently acquired Snowflake partner Vertical Trail.
- Masergy Communications, a global service provider offering hybrid networking, managed security, cloud communications and SD-WAN solutions.
- Vapor IO, a startup that builds and operates small data centers at wireless aggregation hubs.
Earlier investments that led to exits include Lightower Fiber Networks and Telx Group (now Digital Realty).
Additional insights from Joe Panettieri.
