“You’re getting better products,” he observes. “You’re making more money.”
Still, Vorobeychik is cautious not to generalize about the current or future influence of private equity on the managed services space. “It can be a positive or a negative,” he says. “It really depends on who is investing in the companies, and what their goals are.” Firms that build their strategy around cost-cutting, for example, can in some cases do harm to otherwise healthy businesses.
Vertica, on the other hand, is a growth-oriented investor. “We’re not focused on doing anything but bringing more R&D resources, bringing more customer support people, bringing more value,” Vorobeychik says. “We believe there is a real market opportunity to make these companies bigger.” His role in that process is to help managers make better, more informed decisions while leaving the product development to the product developers.
“We never believe that we know better on that side of things,” Vorobeychik says of Vertica. “We just want to augment them to grow in a way that brings them together with the people who matter, other founders, other entrepreneurs, and really encourage them and give them capital to not only continue to have that discipline and product development but maybe accelerate their product development timelines a little faster, so then we can grow a little faster.”
Vorobeychik, like many other investors and industry observers, sees especially fast growth coming for vendors in two segments of the IT industry, security and cloud computing. Once defined largely by anti-virus software, the former market is diversifying into a range of new categories in response to an equally diverse and continually growing array of threats.
“We’re just starting to touch the surface of security,” Vorobeychik says. “We’re seeing a lot of great products coming out to serve other needs in the security market, from mobile to a lot of the compliance needs.”
The cloud opportunity is still in its infancy as well, he adds, despite the already massive growth of platforms like Amazon Web Services and SaaS applications like Microsoft Office 365. “I still believe that there is a big market opportunity for just managing that, or migrating VMs to a cloud interface,” he says.
With so many of the biggest vendors already in the hands of private equity firms, Vorobeychik believes the next big wave of investment will target smaller, younger companies than Kaseya or ConnectWise, with innovative but narrower takes on specific industry segments. There will be no shortage of funds participating in that wave either.
“The MSP market is an attractive one and it deserves to be served in the right way,” Vorobeychik says. “We’re always looking for good opportunities there.”