Whether the future of work is in-office at a traditional office structure, hybrid, or fully remote is yet to be seen but one thing is for sure is that organizations will need IT support to meet the needs of a dynamic and evolving workforce. Companies that had the proper IT support infrastructure in place were able to respond quickly to address the pandemic without significant interruption to workflows. Electric, a pioneer in the tech-enabled managed service provider (MSP) space, supports the needs of the small and medium-sized businesses that need a dedicated IT team without incurring the cost and administrative burden of bringing these functions in-house. The company’s 100+ IT technicians are able to fully remotely manage things like a client’s networks, devices, security, applications, onboarding/offboarding, and data monitoring. Employees are able to reach an IT expert within 10 minutes to handle their inquiries using popular chat communication platforms like Slack or Teams. Electric now provides support for over 700 businesses that comprise 40,000+ employees. The company has more than doubled its ARR in the last year, acquired two businesses, and expanded the team to ~450 employees.
AlleyWatch caught up with Electric CEO and Founder Ryan Denehy to learn more about the company’s growth, traction, strategic plans, latest funding round, and much, much more.
Who were your investors and how much did you raise?
We raised $90M in Series D funding led by existing investor, GGV Capital with participation from other existing investors Bessemer Venture Partners, Primary Venture Partners, Greenspring Associates, 01 Advisors, Atreides Management, Vintage Investment Partners, and Slack, bringing Electric’s total amount raised to over $189M.
Tell us about the product or service that Electric offers.
We make IT easy for small and mid-sized businesses. With over 700 customers and more than 40,000 employee end-users, Electric’s IT platform includes security, device & inventory management, network & server management, application & cloud management, employee on-boarding, and off-boarding, procurement & provisioning, and data monitoring & insights. It’s delivered with real-time IT support via Slack or Microsoft Teams, giving companies access to over 100+ IT technicians.
What inspired the start of Electric?
When I was running my previous startup (Swarm Mobile, acquired by Groupon in 2014) I was also managing our IT. I would spend an entire weekend setting up laptops for new hires, and then the following week we’d have to send the sales team home because the internet was down. I was really surprised that there weren’t any startups solving all of this in a modern way. At Swarm, we also ended up selling our product through local IT providers so I got to understand the market a lot better from that side. One day it all clicked and I decided I had to do this!
How is Electric different?
For small businesses, your options traditionally were to work with a local IT consultant or to have someone handle it internally, who is not actually an IT person. With everything moving to the cloud both approaches seemed slow and inefficient. We decided to rebuild the IT experience from scratch by creating a self-serve dashboard along with real-time support through Slack or Teams. Fast, easy, simple, cost-effective — in most cases, Electric delivers a 105% ROI according to a recent Forrester TEI report.
What market does Electric target and how big is it?
Broadly speaking, we are here to help small and mid-sized businesses. Practically speaking, it’s companies as small as 10-12 employees or as large as hundreds. This is obviously a huge market!
What’s your business model?
Electric is a SaaS platform and we currently have a price-per-seat model like most other SaaS companies.
What was the funding process like?
We worked exclusively with existing investors this round, so it was different than in the past when we were sourcing new VC partners. Everyone involved knows us, knows our business, and truly believes in the value of Electric’s technology.
What are the biggest challenges that you faced while raising capital?
When I did the first close of our Seed, I thought of the 100 ways we would fail. I spent half an hour thinking about wiring the $1M back to Bowery Capital. Fearless conviction in founders is overly-celebrated; I doubt myself all the time and that doubt is healthy, and it’s certainly part of the reason we are where we are now.
I had 25+ firms tell me no in our Seed, and that was with a signed term sheet from a great lead and two prior exits. It’s much more difficult than many industry vets make it seem. It wasn’t until my second company that I realized when a VC passes, often the real reason is that they don’t believe in you to get the job done. It’s a tough pill to swallow, but it’s better to recognize it than run away from it. Find the partners that do believe in you.
I had 25+ firms tell me no in our Seed, and that was with a signed term sheet from a great lead and two prior exits. It’s much more difficult than many industry vets make it seem. It wasn’t until my second company that I realized when a VC passes, often the real reason is that they don’t believe in you to get the job done. It’s a tough pill to swallow, but it’s better to recognize it than run away from it. Find the partners that do believe in you.
What factors about your business led your investors to write the check?
It didn’t hurt that they’d written us checks before and we’ve delivered. Beyond the existing relationships, the growth was clear. In the last year, we’ve acquired two MSPs. While important to any business, growth for the sake of growth has never been our mission; both acquisitions were made strategically to further expand product offerings and market presence. In order to get there, we’re focused on scaling responsibly with customer service and employee wellness at the forefront.
In addition to acquisitions, we’ve seen a 183% increase in headcount (up to 444 employees) and a 111% increase in annual recurring revenue (ARR). We’re also currently supporting over 700 customers and 40,000 end-users, including Thrive Causemetics, Morning Brew, Pacific Catch, and Social Fly, up from 400 customers in February 2021.
What are the milestones you plan to achieve in the next six months?
Keep building, growing, and delivering a great solution to our customers.
Where do you see the company going now over the near term?
Sustainable growth and investments in a fantastic product.
What’s your favorite outdoor dining restaurant in NYC?
My wife and I go to The Dutch fairly often since it’s around the corner from our place. But if it were 100% up to me, I’d get deep dish pizza at Emmett’s on MacDougal every week!
