Electric, makers of IT infrastructure software for SMBs, has been on a tear lately.
The company announced the close of a $90 million Series D financing round today. GGV, an existing investor, led the round, with participation from other existing investors Bessemer, Primary Venture Partners, Greenspring Associates, 01 Advisors, Atreides Management, Vintage Investment Partners and Slack.
What Electric does for IT infrastructure is similar to what Justworks does for HR. Instead of an SMB hiring out a person or a department to handle the basics of IT, 90% of which is maintenance and compliance, Electric software handles distribution, maintenance and security for an organization.
Before Electric, there were two options for SMBs: build out your own IT department, or use a local IT provider. Electric came on the scene and allowed an admin within the company to make sure all devices were up to date, secure and compliant, as well as issue new equipment and revoke permissions.
In the COVID era, where remote work has become the default, the need for something like Electric has only grown, which is showing in the startup’s metrics.
In 2020, the company saw more than 100% revenue growth. Interestingly, Electric set very aggressive growth targets for 2020 and beat all of them, despite the fact that they went two months at the beginning of lockdown without selling a single thing. (Many startups saw an accelerating digital transformation create a warm market for their products.)
This led to the company’s Series C funding, closed in February, with Electric counting just shy of $20 million worth of ARR and 400 customers at the time. The growth continued through this year, with the startup’s customer count rising to 700, along with 40,000 total end users and 111% ARR growth on the year.
Investors came a knockin’ to raise yet again, and CEO Ryan Denehy thought about the long-term trajectory of the company.
“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,” said Denehy. “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.”
Right now, the company is tracking at just under $40 million ARR for 2021.
As with most scaling SaaS businesses, focus is the greatest challenge.
“We don’t have the same competitive pressures as most B2B SaaS companies and we’ve got an operationally complex business,” said Denehy. “So on any given day, there are so many economically compelling opportunities and so many things that we could do to flip a switch and get a new line of business generating millions of dollars in revenue. But at the same time, we have to respect that the reason we don’t have any venture-backed direct competitors is because this is a super hard problem to solve. So if we start to get distracted by running in too many different directions, we’re going to dilute the quality of everything else that we do and potentially get taken off track.”