As we move deeper into a cloud-centric world, everything was supposed to get easier, but in truth there’s a lot of moving parts, and companies need help getting everything to work. This takes people with a particular set of skills to help clients with tasks like integrations, managing hybrid and multi-cloud environments and getting data where you need it.
Tercera, a new venture capital firm launching today wants to attack this problem by investing in companies that can act as helpers and consultants. In a world where venture capital tends to gravitate mostly towards software and hardware, this is a distinctly different investment thesis.
Chris Barbin, founder and CEO at Tercera knows quite a bit about this. He was one of the founders at Appirio, a consulting firm founded way back in 2006 when cloud computing as we know it today was just getting off the ground. His former company had the vision and the foresight to start a firm to help companies use new tools like Salesforce, Google, Workday and AWS. Wipro bought the company in 2016 for $500 million after it had raised over $117 million, according to Crunchbase data.
Barbin believes that today, the level of complexity has only increased, and there will be a growing need for what he calls this people power to make everything work, and that takes a specialized kind of investor. “There’s been a flurry of investment activity into professional services-based companies over the last couple of years, but there’s never been an investment firm that is exclusively focused on these types of businesses,” Barbin explained.
During the firm’s research phase, the founders identified key platform companies like Salesforce, Twilio, Snowflake, DataDog and Cloudflare, and they estimate that there are between 7500 and 10,000 consulting companies supporting companies like this. “The goal of the firm is to help create a kind of a powerhouse for those emerging [platforms], or a firm or two that actually has the collection of those [SaaS platforms] in their toolkit,” he said.
The company will be targeting established firms with revenue between $5 and $20 million with aspirations to grow into the hundreds of millions, and will be doling out investments of between $5 and 20 million of capital per bet.
The firm is just getting started, but plans to have 8 employees by mid-year. Barbin indicated at least one investment was already in the pipeline, but wasn’t ready to give details just yet.