When Insight Partners acquired data protection specialist Veeam Software and IoT security firm Armis in separate deals this week, the private equity firm described major growth opportunities for both technology businesses.
But how exactly does Insight Partners work with its portfolio companies to accelerate those businesses? Listen closely, and you'll hear two key terms from Insight. Namely, ScaleUp and OnSite. But what exactly do they mean?
Hilary Gosher, an Insight Partners managing director who leads Onsite, offered these perspectives to ChannelE2E:
"When CEOs with market-leading technology seek an investment from Insight, capital is not usually the primary driver, rather it’s access to Insight’s deep bench of software ScaleUp experts that make partnering with Insight a road to continued success.
The ScaleUp phase of a software company’s evolution requires revenue growth and operational excellence to realize the company’s potential. With customers and product validation, a company “graduates” from being a startup, and the hard work of business building begins as a ScaleUp. We know the majority of startups fail, and an even smaller number of ScaleUps are able to successfully scale and grow sustainably. Insight’s Onsite team of software experts partner with CEOs and their executive teams to provide operating blueprints that assure fail-safe growth in critical areas like talent, marketing, sales, customer success and M&A. Onsite is an entrepreneur’s safety net in their ScaleUp phase.
The Onsite team has rich experience bringing market-leading companies from overseas and successfully scaling them in the US market, we are excited to roll up our sleeves and support Veeam in rolling out their Act II in North America."
Private Equity: Building Up vs Tearing Down
The ScaleUp and Onsite strategies are particularly important in today's U.S. political climate. Some private equity firms and hedge funds are under attack for acquiring businesses, loading them up with debt and cutting staff to boost profits. The result occasionally involves business implosions (i.e., Sears and Toys R Us, among others).
In response, U.S. presidential candidate Elizabeth Warren is calling for new private equity restraints to combat "legalized looting," she alleges.
No doubt, some private equity deals involve buying distressed companies, slashing costs and squeezing the business for every profit possible. But some political rhetoric overlooks how private equity deals actually create jobs, mentor executives and management teams., and propel businesses forward.
Private Equity: Long-Term Upside
A key example involves Kaseya, which Insight Partners acquired in 2013. The business stumbled a bit under management changes and global reorganizations in 2014 or so. But by 2015 the company was stabilized. And from 2016 forward, Kaseya has been in rapid growth mode -- promoting IT management software to MSPs and midmarket IT departments.
Some of the growth involved plugging Insight portfolio companies such as Unitrends into Kaseya. But much of the growth also involved organic expansion -- including a renewed emphasis on MSPs.
Among the key steps Insight took to stabilize and then grow the business: Hiring CEO Fred Voccola in July 2015. Publicly, Voccola is an aggressive, outspoken market competitor. Privately, he's a strategist who worked closely with Insight to rebuild and fine-tune Kaseya's management team, support services and R&D.
Fast forward to present day, and Kaseya is now an extremely rare technology unicorn -- a privately held business that's profitable and valued at more than $1 billion.
Funding Even Bigger Unicorns: Veeam, Armis
For Insight Partners, the investment stakes are even higher for this week's Veeam and Armis investments. The separate deals are worth a combined $6.1 billion.
Where do Veeam and Armis go from here? No doubt, the answer for both companies involves Insight Partners' ScaleUp and OnSite strategies.
