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Effectual Acquires JHC Technology To Scale Public Sector AWS Practice

The AWS channel startup from the founders of Datapipe is looking to add more acquisitions in 2020 with $50 million in private equity funding.

Effectual, a fast-rising Amazon Web Services partner formed by the brain trust behind former managed services giant Datapipe, has completed its first acquisition—one that positions it to become a major player in the public sector.

The Hoboken, N.J.-based managed and professional services startup said Tuesday it closed a deal late last year for JHC Technology, a specialist in offering managed Amazon cloud services to government agencies that's based outside Washington D.C. in National Harbor, Md.

The companies did not disclose financial details. But the deal was made possible by a $50 million investment from two private equity partners that will be used to finance more acquisitions in the coming year as well as to fuel organic growth, Effectual CEO Robb Allen told CRN.

[Related: AWS CEO Andy Jassy’s ‘Very Ambitious Plan’ To Keep AWS On Top]

Effectual plans to expand rapidly over 2020, Allen said, with its next acquisition likely targeting a DevOps-focused managed cloud provider.

Effectual launched its AWS-exclusive practice about a year ago—a year after Rackspace bought Datapipe in a blockbuster deal that reshaped the channel landscape.

Now the startup is looking to "reinvent the MSP for the modern cloud world," Allen said.

Datapipe broke ground as an MSP in both its relationships with AWS and Microsoft Azure. But when he and other key members of the Datapipe team formed Effectual, they were eager to start from a blank canvas, Allen said.

Those founders were informed by years of experience operating several Datapipe data centers in North America, but they were motivated by how customers were changing their approach to modernizing IT. They asked themselves, "if we didn't have legacy data centers, what would we do based on what we know customers are looking for?"

Just like enterprise customers trying to gain competitive advantage in their markets, the government is looking to modernize its IT, Allen said. To seize that opportunity requires a solution provider able to offer high-level professional services complemented by compliance and governance expertise and premier support.

JHC, founded in 2010, has proven its know-how in serving the public sector and can "punch way above their weight," Allen said.

AWS recognized that achievement at last year's re:Invent conference by naming JHC the winner of its 2019 Nonprofit Competency Public Sector Consulting Partner award.

By leaning on its Datapipe experience, Effectual can help JHC scale that practice to become an even a larger player with both large government agencies and midsize enterprises.

The $50 million fund that will make that possible originates from a new investment from Catalyst Investors and a follow-on investment from Lumerity Capital.

Those equity firms are not only providing significant capital resources, but they are valuable to Effectual as strategic partners with a deep understanding of the market, Allen said.

Over the course of the next year, the two MSPs will merge their operations, platforms and branding, Allen said. The JHC team will remain in place.

And going forward, "we want to add more strategic investments like JHC," Allen said.

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