ConnectWise formed an investment firm with $20 million that it wants to give to companies to help bring more solid, channel-only products and services to the solution provider market.
ConnectWise set aside the funds from its war chest to form ConnectWise Capital to help VARs -- and other companies -- turn their ideas into money-making businesses, according to CEO Arnie Bellini.
"We really feel that most of the innovation today is coming from the channel itself," Bellini said.
The channel has evolved beyond solution providers eagerly anticipating the next release of Microsoft Office or Intel's new chipset to make money, Bellini said. Now solution providers must have higher skill sets and come up with innovative ideas to help customers improve their business processes and efficiencies.
"Computers are fast enough. The Internet connects us all. There are a broad number of standards in place now that are allowing more innovation because we're no longer building that infrastructure," Bellini said. "Most of the IT solution providers made their money getting that infrastructure in place at the SMB level. Now we have to get to the next level."
Solution providers have been creating their own products and services for years, but in this economy they may need a little financial boost to get their ideas off the ground, Bellini said. Unlike traditional venture capital firms, ConnectWise Capital has the added benefit of 28 years of channel experience. So Bellini and his brother David Bellini, who will oversee ConnectWise Capital, believe they know what will work well for the channel.
"We're going to pick investments in products and services that benefit the IT nation. We're not going to worry about whether they are ConnectWise partners or not. If it's a good solution, if [solution providers] can benefit, that will be the green light," said David Bellini. "We're at the center of this ecosystem with ConnectWise. We need to make sure this ecosystem is healthy and fertilized."
Ideally, companies that apply for some of the funding will be developing products that earn them 20 points or more of profit margin to help them reduce their dependence on selling a manufacturer's products that might earn them 3 points of margin, the Bellini brothers agreed.
There is no cap or limit to the number of companies that will receive some of the $20 million, said Arnie Bellini.
"We'll let individual circumstances control that. And if we need to go beyond $20 million, we have the ability to do that. We have tremendous confidence in our ability to help them execute and create a very positive cash flow situation very quickly," Bellini said.
