Earlier this year (February to be exact) we wrote about a company called Electric raising $40 million to pursue their vision of being the IT infrastructure for SMBs. Well this week, the company more than doubled its last raise with a fresh $90 million Series D round. This speaks to the vast market that Electric is chasing.
As we know from lots of data in the marketplace — including our own Modern Commerce Monitor — SMBs are shifting more and more of their business operations to the cloud. That means that more and more potential headaches for business owners to endure.
As we wrote before, SMBs have usually had two options for managing their IT stuff. One was to hire somebody to manage it. But that only made sense for businesses that were large enough to support a full-time IT person. It could be that many business owners simply asked someone at the front desk to pretend they were an IT person. But that approach was likely to fail badly. The other option was to find one of some 50,000 MSPs out there to do it for them. Sometimes that would work out just fine, but not always.
Owning the SMB Cloud
So that’s what Electic is up to. It wants to be that IT resource in the cloud to manage all of an SMB’s cloud activities. And the company has been on a tear, growing revenue in 2020 by 100%. We don’t have 2021 growth rates, but we’d be surprised if they’re not well above 50% year-on-year growth. The company is now up to about $40 million in ARR and probably well on its way to plus $100 million ARR.
Here’s what CEO Ryan Denehy had to say about the company’s latest raise. “We started to realize that we could double the business again next year, we can double it probably the year after that, and all of a sudden we could have a company that could be ready to go public in two to three years, that’s a really compelling opportunity, but it’s going to take more capital to really prepare ourselves and the team and the product to be on a true pre-IPO trajectory.”
Some top VCs are backing the company. This includes GGV, one of the leaders in helping SMB SaaS start-ups scale.
It is no surprise there’s lots of excitement about the future of Electric. If you think about the opportunity to take a small slice of the IT business that some 50,000 MSPs currently book, it points to a very huge TAM. Our guess is that what will make or break Electic is how aggressively and thoroughly it can simplify and demystify the world of IT – compliance, security, permissions, maintenance to name just of few of the key activities. If you’re a dentist, those things sure don’t sound like filings and Xrays and dentures. We’re pretty sure if Electric can simplify and demystify. And it may be going public a lot sooner than the company’s leadership could have imagined back in March 2020.