Investors see growing upside in the business of procuring cloud and colocation services. IT agency UPSTACK has received a $50 million investment from private equity firm Berkshire Partners, an experienced player in data center investing.
The investment will be used to enhance UPSTACK’s technology platform and expand its product and service portfolio. The company says it also intends to “accelerate its investments in the industry’s top-producing sales agencies,” signaling more consolidation ahead. UPSTACK has acquired nine independent agencies representing a team of more than 15 experts, which will be announced in the coming weeks.
“UPSTACK has quickly become a leader in a large, rapidly growing and highly fragmented market,” said Josh Johnson, Principal at Berkshire Partners. “Our experience has reinforced the importance of the agent channel to enterprises designing and procuring digital infrastructure. UPSTACK’s platform accelerates this digital transformation by helping its advisors better serve their enterprise customers. We look forward to supporting UPSTACK’s continued growth through M&A and further investment in the platform.”
Since its founding in 2017, UPSTACK has completed more than 1,000 data center, connectivity and cloud-based projects. The company has raised about $35 million prior to this week’s equity investment, which provides Berkshire with a minority interest in UPSTACK. The company is based in New York and has offices throughout the U.S., including internet hubs in Northern Virginia, Denver and both Northern and Southern California.
“UPSTACK was founded to bring enterprise-grade advisory services to businesses of all sizes,” said Christopher Trapp, Founder and CEO of UPSTACK. “Berkshire’s expertise in the data center, connectivity and managed services sectors aligns well with our commitment to enabling and empowering a world-class ecosystem of technology solutions advisors with a platform that delivers higher value to their customers.”
Prior to launching UPSTACK, Trapp was a co-founder of Aligned Energy, and also has industry experience at Sabey Data Centers and Blue Ridge Data Center.
UPSTACK’s technology platform allows IT users to compare service providers and develop pricing estimates for service packages, automating many of the most time-consuming components of sourcing IT solutions. UPSTACK’s service portfolio includes colocation and data center space, network connectivity, SD-WAN, unified communications, cloud contact center, private and public cloud, security, mobile, business continuity and IoT.
The company generates revenue in a few different ways. If a customer engages UPSTACK and prefers not to pay consulting fees, UPSTACK receives commissions from the suppliers that are ultimately selected in a closed transaction. Other customers may pay consulting fees similar to other consulting firms like Accenture.
Berkshire Partners has made more than 130 private equity investments, and has experience in the data center sector from its ownership of colocation and interconnection specialist Telx, which it acquired (along with Abry Partners) in 2011. The companies sold Telx to Digital Realty for nearly $2 billion in 2015. Berkshire has also been an investor in Vapor IO, Crown Castle, metro fiber specialist Lightower, and many other telecom industry firms. Berkshire Private Equity aims to invest $100 million to $1 billion in each portfolio company, and the firm is currently investing out of its ninth fund, with total equity commitments of $5.5 billion.