Unified Office Nabs New Funding To Scale Channel Business

Unified Office hopes to stake its claim to a slice of the SMB market by banking on an industrywide trend taking place among companies transitioning away from legacy VoIP phone systems.

New funding, part of a Series A round, from LaunchCapital Chief Investment Officer Bill McCullen, and Charles River Ventures Co-Founder and Partner Emeritus Rick Burnes, should help the company tap that market through Unified Office's channel network.

The recently announced funding will go toward hiring a business development executive that can help build the company's channel partner network and sales force training.

[Related: Top 10 VC-Funded Hardware Companies That Got Their Start Via Crowdfunding]

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"The resellers, which we're using to access the SMB market, the 10 to 100 [users], are still trying to sell PBXs, and it's really hard for them to make that switch [to the cloud]," Unified Office CEO and Founder Ray Pasquale told CRN. "The few that tried maybe got burned by selling entirely on the cloud. That's the opportunity for Unified Office, is basically to build a company that can solve those types of problems but doing it in a way to adapt to your business."

The Portsmouth, N.H.-based company provides hybrid private cloud-based virtual office services. Although it's aimed at SMBs, it's capable of ratcheting up to work with larger companies in the 500-user range. It's currently working with a law firm in Boston that's around 500 users, as well as a Los Angeles-based restaurant franchisee on a VoIP system integrated with the chain's point-of-sale system.

At least 90 percent of the company's business comes through its roughly six channel partners. That number previously had been as high as 15 but had to be scaled back to ensure its reseller network was made up of the right people, according to Pasquale. The channel itself is in its own transition period that's running parallel to the one taking place among businesses.

"There's thousands [of resellers] out there," Pasquale said. "The challenge is to identify those that can make that transition. They're still trying to sell those PBXs."

So much of Unified Office's energy is currently being spent on marketing plays and teaching prospective partners where the company fits in the marketplace, and how they can tap recurring revenue streams out of working with the company.

"You have to spend a lot of money on marketing on the front end, evangelizing the channel," Pasquale said. "What we're seeing is a lot of PBX folks are fading away and we're seeing a new channel emerge. It's a combination of managed service providers and old telecom agents. So that's what we're starting to see is experts in cloud storage. You couple that with Amazon Web Services, and you need a new kind of animal to service the enterprise."

There's traction among IT managed services companies, Pasquale said.

"This is all part of the shift from analog telephone to digital telephones," investor Burnes told CRN. "The new people that are selling it are digitally oriented, and unless the resellers make that transition, they're going to be in the short end of the market."

That's because the thought is that the industry is in the early stages of what's set to be a huge replacement cycle of legacy systems, and it's one reason why Burnes made an investment into Unified Office.

"It's a combination of that … and the fact that the team that's trying to do this really knows as much about the complex telephone operating world as any team around," Burnes said.