MSP Power Play: Electric Acquires Fellow New York Firm
‘We will continue to do services as we did before. But we’ll be doing more services in new areas, such as marketing. We’re too small to have a marketing team, but Electric has a full marketing team and HR (human resources) team. With world-changing events like this pandemic, it’s great to have teams like that supporting us,’ says Larry Velez, Sinu’s chief technology officer and founder.
Electric, a provider of real-time support and IT management for SMBs, on Thursday said it has acquired managed service provider Sinu.
The acquisition, the value of which was not announced, gives Electric and Sinu, both based in New York, the opportunity to quickly expand their businesses, said Ryan Denehy, Electric’s CEO (pictured above).
While Sinu is an MSP by any definition, Electric has a unique value proposition, Denehy told CRN.
Rather than providing traditional MSP functions, Electric uses its big engineering team to build proprietary software that integrates with Slack and Microsoft Teams to provide automated support without the need for old-school ticketing, he said.
“It’s a huge market,” he said. “Four years ago, no one thought to turn the MSP market on its head by reimagining it as a software business like we did.”
Denehy described Electric as a modern MSP but with a software front-end user interface.
“We built our front end, our user interface, and self-service tools,” he said. “And over time, we offered clients more support via software, and less via humans. We are providing managed services, but just different from everyone else.”
Electric, now in its fourth year of operation, already has 250 people and 450 customers, Denehy said. Revenue has been doubling every year, and in 2020 will be about $20 million. The company has received about $60 million in funding over a few rounds, the last of which closed in May for a total of $21 million with investors including former Twitter executives, European venture capital firm 01 Advisors, and Slack.
Because of that growth, and in particular the growth it is experiencing since the start of the COVID-19 coronavirus pandemic, Electric realized it needs to have a world-class services business, and that led to the acquisition of Sinu, he said.
Denehy said he has known Larry Velez, Sinu’s chief technology officer and founder of Sinu, for years after their introduction by a mutual friend, and knows that Sinu is known for its support.
“We believed in each other’s visions, and so we decided to merge,” he said. “I knew part of our strategy would involve the acquisition of an MSP. And I think Larry knew that growth for Sinu would come from the connection.”
Because of that connection, Electric acquired all of Sinu, but does not plan on making any real changes to that company, Denehy said.
“They have awesome customers,” he said. “We don’t want to mess anything up. Over time, if Sinu customers need software tools, we can provide them.”
Electric may move some of its clients to Sinu, but not right away, Denehy said.
“First and foremost, we want to make sure nothing changes for Sinu customers,” he said. “Over the next six months, we will start thinking about how to bring joint solutions to market together.”
Velez told CRN that Electric was the first company to offer real-time support via Slack, and was right on target in building for the future of how support should be done.
The two companies provide a comprehensive support offering for clients, Velez said.
“We bring on-prem support and in-person support,” he said. “They approach support via Slack. Together, we provide a full range of services whether it’s on-prem, in-person, or via Slack.”
Nothing changes for Sinu’s clients because of the acquisition, Velez said.
“We will continue to do services as we did before,” he said. “But we’ll be doing more services in new areas, such as marketing. We’re too small to have a marketing team, but Electric has a full marketing team and HR (human resources) team. With world-changing events like this pandemic, it’s great to have teams like that supporting us.”
Sinu is also looking forward to having dedicated software development teams with Electric, Velez said.
“Software today is not always up to date to 2020 standards,” he said. “It will get there. But we also need to go beyond software to things like machine learning. All software vendors will be doing that. And all MSPs will be moving to that kind of software.”
Sinu, which was founded in 2000, grew its business without outside investment or acquisitions, Velez said.
“We were offering managed services from the start long before there was a term for managed service providers,” he said. “We’ve never had billable hours outside of some professional services we’ve added on top of our managed services.”
Because of the COVID-19 coronavirus pandemic, the agreement for Electric to acquire Sinu was orchestrated via Zoom, with all the documents signed via DocuSign, Denehy said.
“Larry [Velez] was in Tampa, and his partner was in Maine,” he said. “I was in New York, while my chief financial officer was in Boston,” he said. “Personally, I like meeting people in person. Larry and I had met before, so that made a big difference in making the deal. As we look at other deals coming up, I think we would like to do them in-person. But as this case showed us, we certainly don’t have to.”