Tag: electric.ai

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Lightning strikes again as Electric hits unicorn status

Wherever we are in the journey of navigating a pandemic, remote work is still hot. Electric, one of the many companies making it easier for organizations to work remotely, has capitalized on this trend so much in the past couple years that it’s now a unicorn.

Founder and CEO Ryan Denehy told TechCrunch that the startup has raised $20 million in what it’s calling a Series D-1 from Harmonic Growth Partners, Bessemer, Greenspring and others.

This raise, which comes just five months after the raise of a $90 million Series D, was at a slightly higher price than the last one and brings the valuation to $1 billion post-money.

Electric provides IT infrastructure to SMBs to take care of most of the grunt work of the IT department, such as deploying new hardware, keeping all machines and licenses compliant, granting and revoking permissions, etc. This means that a company can theoretically have just one proper IT person, or contract it out, for any troubleshooting issues or non-administrative work.

Image Credits: Electric

Hard unicorn data

Denehy has been raising money aggressively for Electric as the pandemic fueled usage and adoption of its product. The result of the capital raises and favorable market conditions has been rapid growth. In 2021, Electric said that it doubled users and revenue, leading to annual recurring revenue (ARR) expansion from $17 million in 2020 to $38 million last year, or 124%.

Even more, the company said that it on track to roughly double again this year, bringing its ARR to $70 million or more in 2022, according to Denehy.

Because Electric was willing to share hard revenue numbers and targets, the company has provided is a clear window into the current state of unicorn valuations. At $38 million ARR and a $1 billion valuation, Electric is worth around 26x its present-day ARR. That’s lower than the multiple range that many startups raised at during 2021’s go-go fundraising climate.

But things get even more interesting if we consider that the company is likely well capitalized, and thus won’t need to raise again this year. That means that Electric may close out 2022 with, say, $70 million ARR and the same $1 billion price tag. At that revenue scale and valuation, Electric would be worth just over 14x its ARR, a multiple that given its loosely three-figure growth rates feels cheap, even at today’s more limited market prices.

Electric confirmed that it raised this capital at a higher price. Our read, then, is that it didn’t scale its value so richly in the process that it could find itself in a pickle when it looks for more capital in the future. Indeed, if the company can hit its 2022 growth targets, it’s going to look cheap heading into 2023, putting in a good place to raise more capital if it wants or needs to, and keep its growth humming.

Accelerating goals

“I wanted us to expand our goals beyond the initiatives that we based the Series D around,” said Denehy. “In this market, I want us to be as aggressive as we want to be without impacting runway.”

Denehy expanded on his plans, sharing a few product initiatives that are in the works for this year.

First, Electric is working on a lightweight version of the product that can be purchased and deployed through self sign-up. Building off of that, the company is also working on a self-service marketplace, allowing clients to purchase add-ons or other software (like anti-virus) from Electric.

The company would also like to get proactive with its product and deliver IT insights to customers, offering recommendations to help customers make decisions around security, new technology products and software updates.

Moreover, the extra $20 million will help Electric do more (and larger) M&A deals. Thus far, Electric has acquired Sinu and TechVera, according to CrunchBase.

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Electric raises $40M Series C to put small-business IT in the cloud

It would be an understatement to say that enterprise-focused startups have fared well during the pandemic. As organizations look to go remote, and the way we work has been flipped on its head, quickly-growing tech companies that simplify this transition are in high demand.

One such startup has, in fact, raised $61.5 million in the last 12 months alone. Electric, a company looking to put IT departments in the cloud, just announced the close of a $40 million Series C round. This comes after an extension of its Series B in March of 2020, when it raised $14.5 million, and then an additional $7 million from 01 Advisors in May of 2020.

This Series C round was led by Greenspring Associates, with participation from existing investors Bessemer Venture Partners, GGV Capital, 01 Advisors, Primary Venture Partners as well as new investors including Atreides Management and Vintage Investment Partners.

Electric gets another $7 million in funding from 01 Advisors and the Slack Fund

Electric launched in 2016 with a mission to make IT much simpler for small and medium-sized businesses. Rather than bringing on a dedicated IT department, or contracting out high-priced local service providers, Electric’s software allows one admin to manage devices, software subscriptions, permissions and more.

According to founder Ryan Denehy, the vast majority of IT’s work is administration, distribution, and maintenance of the broad variety of software programs at any given company. Electric does most of that job on behalf of IT, meaning that a smaller business only needs to worry about desk-side troubleshooting when it comes up, rather than the whole kit and caboodle.

Electric charges a flat price per seat per month, and Denehy says the company more than doubled its customer base in the last year. It now supports around 25,000 users across more than 400 individual customer organizations, which puts Electric just shy of $20 million ARR.

This is the first time Denehy has come anywhere close to sharing revenue numbers publicly, but it’s a good time to flex. The company has recently introduced a new lighter-weight offering that includes all of the same functionality as its more expensive product, but without access to chat functionality.

“The name of the game is just simplicity, simplicity, simplicity,” said Denehy. “Part of this is in response to the fact that people are realizing the permanence of hybrid work. During the pandemic, people stopped paying their landlords but they didn’t stop paying us. So in the summer, we started to focus on how we can create more offerings that we can get in the hands of more businesses and let them start their journey with us.”

Denehy says that a little less than half of Electric’s client base are tech startups, which makes sense considering the company launched in New York in a tech and media-centric ecosystem. As a way to expand into other verticals, Electric acquired Sinu, an IT service provider who happened to have an impressive roster of clients outside of Electric’s comfort zone, such as legal, accounting and non-profit.

Here’s what Denehy said at the time:

Organic market entry, even in adjacent markets can be extremely time consuming and expensive. Sinu’s team has done an excellent job winning and pleasing customers in a lot of industries where we currently don’t play but probably should. The combination of our two companies is a massive shot in the arm to our national expansion strategy.

Alongside growth, both of the Electric team and its customer base, the company is also investing in expanding its diversity programs and philanthropic efforts.

The Electric team is currently made up of just under 250 full-time employees, with 32.5 percent women and around 30 percent of employees being non-white. Specifically, nearly 12 percent of employees are Black and 10 percent are Latinx.

Denehy explained that he thinks of the company’s payroll, which is in the tens of millions of dollars, as one of the biggest ways he can make a change in the world.

“We will wait longer to fill a role to make sure that we have the most diverse pipeline of candidates possible,” said Denehy. “A lot of founders will say that nobody applied. Well, the reality is you didn’t look hard enough. We’ve just accepted that like it may take us longer to fill certain roles.”

This latest round brings Electric’s total funding to more than $100 million.

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Electric reopens Series B to make room for Dick Costolo and Adam Bain

Electric, the platform that delivers IT services to small and medium businesses, has today announced that it has raised an additional $14.5 million on its Series B from 01 Advisors, the fund led by Twitter alums Dick Costolo and Adam Bain.

Though the funding is a part of the company’s Series B financing, founder Ryan Denehy explained that the deal was signed on a uptick in valuation, though wouldn’t elaborate further.

Electric raised a $25 million Series B led by GGV in January of 2019.

The company allows businesses with small IT teams, or no IT team, to get on the platform and either automate or manage with one click the various administrative facets of that role. Most IT tasks are focused on administration, distribution and maintenance of software programs.

Electric customers ensure that the software is installed on every corporate machine, effectively giving the top IT employee or decision-maker an easy way to grant and revoke permissions, assign roles, and make sure software is up to date on various machines.

The hope is that this allows IT specialists to focus on the jobs that are best suited to their skills, such as troubleshooting, hardware installation and other more difficult tasks.

Denehy said that this new fundraise was all about bringing strategic operators under the tent, not cash. He explained that at the close of last year, VCs started reaching out to get in on the company’s Series C. The team sat down for a board meeting where they weighed their options, one of which being a $40 million Series C.

“We have no immediate use for most of that money,” said Denehy. “Is it going to make our customers happy or is it going to make us a better run company? It’s kind of a philosophical question. A lot of founders sort of equate success to the fact that they raised two rounds within six months of each other, and I just took the contrarian view. I wondered what we could actually do to make our company run better and the conclusion was to get the best business leaders and operators in tech to get around the table at our company.”

This brings Electric’s total funding to just over $50 million. Denehy says part of the reluctance around fundraising stemmed from the fact that Electric had tripled top line growth over the past two years. But that doesn’t mean he had all the answers when it comes to hyper growth and scaling the business.

Costolo recalled when Bain first met Ryan Denehy, and came back excited about his willingness to learn.

“Ryan is a really enthusiastic founder/CEO,” said Costolo. “Some founders know they don’t have the answers to everything and that there’s still a lot to learn, and they want to learn. And Ryan is right down the middle for that.”

Costolo also explained that he’s excited about how well Electric fits in to the dogma of ‘software is eating the world’, automating these low-level tasks to free up resources and energy for higher-order tasks.

Costolo and Bain operate slightly unusually for a growth-stage fund (01 Advisors writes checks for later A rounds and B rounds). The duo don’t want to take board seats, as they’d rather be “sitting next to the founder instead of across the table from the founder.”

This results in a hands-on approach based on their experience as operators. Remember, Costolo grew Twitter to a market cap of $23.4 billion before stepping down, and Bain spent six years at Twitter as President of Global Revenue and Partnerships before stepping into the COO role.

Costolo and Bain have already brought their hands-on approach to Electric, having conversations with the Head of HR around how to introduce HR business partners to different departments and how to scale and set goals for the enterprise sales team.