Bootstrapped Microsoft Standout BitTitan Finally Accepts Venture Funding
BitTitan has become a bit of a star in the Microsoft ecosystem, growing rapidly in recent years by offering solutions enabling Microsoft's channel partners to deliver cloud services. The company achieved that success without ever accepting a dime from institutional investors.
At least not until this week.
On Thursday, the Kirkland, Wash.-based software vendor said it has accepted its first-ever infusion of venture funding with a $15 million Series A round.
"We've roughly doubled revenue and employees over the last two years without any funding," Rocco Seyboth, BitTitan's vice president of product and marketing, told CRN. "But we want to more than double. We think we can grow even faster."
BitTitan bootstrapped itself for its first nine years, growing into a 200-person operation that became profitable in 2010 on the back of a popular solution for migrating email and data to Microsoft's Office 365 cloud suite.
But the launch last year of a comprehensive platform for managed service providers changed the company's channel landscape, scaling the partner community by two-thirds in about six months and laying the groundwork for a more aggressive push into international markets, Seyboth said.
TVC Capital, an equity firm based in San Diego, led the round with its largest Series A investment ever. Tao Capital Partners also participated.
BitTitan didn't disclose the valuation the $15 million imparted to the company, but Seyboth told CRN it was "a relatively small, minority investment" at a "multiple against our revenues that is high compared to industry standards right now."
After years of resisting investors -- even throwing some out of the company’s lobby -- founder and CEO Geeman Yip, who initially grew BitTitan from his basement after leaving Microsoft, decided it was time to accept an infusion of cash.
Last summer, Yip hired a new CFO to prepare for that eventuality, Seyboth said.
The change of heart came about because -- despite the explosion in public cloud availability -- cloud solutions still greatly lagged their on-premises counterparts in the market, Seyboth told CRN.
For all the buzz, cloud still is projected in the next few years to represent a small fraction of the overall IT industry, and BitTitan's leadership believes the reason is that VARs, MSPs and system integrators are "stuck in a legacy model of doing things."
"And that's what we're all about," Seyboth told CRN. "Helping the channel transform and become cloud first, recurring revenue first, creating managed services, and that will be the key to digital transformation and driving cloud adoption."
The funding also was driven by BitTitan's shift from an almost exclusive focus on migrating data to Office 365.
The company's MSPComplete offering expanded its role into sales, marketing and managed services across several cloud providers.
That product sparked an explosion in the company's channel.
BitTitan had grown to about 4,500 partners in its first eight years, then absorbed about 3,000 more in the six months following MSPComplete's launch -- further evidence that implementation partners were looking for solutions enabling them to ditch legacy business models and start reselling cloud services, Seyboth told CRN.
"That's why we decided it was time to pour some fuel on this fire," Seyboth said. "We think we have a major role to play in transforming the market and transforming MSPs who are really going to be the middlemen in driving cloud adoption."
The newer partners typically have a different profile.
Those signed in its first eight years were mostly born in the cloud, or at least fully committed to the cloud model. Many of them were Microsoft partners, motivated by Microsoft’s forceful push to focus on selling and migrating to Office 365.
The more recent batch -- those drawn in by MSPComplete -- are more likely to be legacy VARs or MSPs, Seyboth said, reselling on-premises components with little to no services, or managing on-premises deployments with remote monitoring and management tools.
With the funding, BitTitan will concentrate on building MSPComplete's capabilities faster. The company has added new functionality and products every month since the launch, but wants to accelerate the process.
"We're going to hire a ton of new engineers and developers to expand MSPComplete more aggressively," Seyboth said.
BitTitan will also focus more on driving overseas sales.
Last year, 40 percent of the company's revenue came from outside of North America, even with basically skeleton crews working those international regions. Now BitTitan will actively invest in growing its international presence, Seyboth told CRN.
The company may even consider an acquisition, Seyboth said, noting there's a lot of interesting vendors creating tools that can disrupt the managed services industry.
For BitTitan's partners, the $15 million in funding suggests an enhanced partner program and more innovative solutions to power their cloud practices, said Mark Pierce, a vice president at New Signature, a Microsoft-aligned systems integrator based in Washington, D.C.
Pierce started working with BitTitan early in the company's history through InfraScience, a solution provider he founded that was later acquired by New Signature. At the time, "there was no other tools that did these types of cloud migrations," Pierce said.
New Signature, in addition to using the migration toolkit, is evaluating the MSP offering to complement its own sales automation and managed services, he said.
With the Series A funding, Pierce said, he expects to see BitTitan build a more comprehensive partner program and come to market faster with solutions "in the realm of managing, monitoring and migrating."
"They have that stuff now, but they can add on to it," he told CRN.