Electric Raises $25 Million to Expand MSP Footprint

Electric, a startup aiming to disrupt the managed services provider (MSP) business by delivering outsourced remote help-desk support for SaaS apps, desktops and mobile devices aided by AI-enabled chatbots, has received a $25 million round of Series B funding.

Electric’s Ryan Denehy

Ryan Denehy, the founder and CEO of New York City-based Electric, believes that the traditional MSP business is broken, especially with regard to providing help-desk and troubleshooting support for PCs, Macs, mobile devices and SaaS apps. Denehy seeks to fix that and bring other MSPs into his corner.

“Most of the VARs and MSPs in the U.S. just don’t operate with enough scale to provide the kind of services that are going to enable that make the most money and deliver the most complete experience to their customers,” Denehy told Channel Futures.

Small and midsize businesses (SMBs), he said, can get better and lower-cost help-desk support with Electric’s approach of using chatbots to automate routine tasks and use human technicians only when needed. As more SMBs shift to SaaS apps, Denehy says supporting them is becoming easier. Electric supports about 50 of the most popular SaaS apps.

The sizable investment, announced Wednesday, comes from prominent venture capital firm GGV, which has backed such startups as AlienVault, Big Commerce, HashiCorp, Slack,and Zendesk. Existing investor Bessemer Venture Partners also is participating, bringing the total amount raised to $38 million since Electric was founded two-and-a-half years ago.

Electric is the third startup Denehy has founded. He was a co-founder of BNQT Media Group, which was sold to Gannett. The second startup, Swarm Mobile, a retail analytics platform where Denehy said he learned about the IT channel, was sold to Groupon, in 2014.

“When I started Electric, I felt we really could succeed in automating a lot of these really high-volume day-to-day tasks,” Denehy said.

Electric has developed its own natural language processing engine that interfaces with Slack or Microsoft Teams (or any other chat tool with exposed APIs) to allow a business user to create and delete accounts, reset passwords, troubleshoot common issues and other system-administration processes.

Electric’s chatbots are integrated with provisioning, security, monitoring and management tools from Kaseya for PCs and SaaS applications including Office 365 and Jamf for its large base of customers with Macs and iOS-based mobile devices. While many commercial systems-management (sysadmin) and remote-administration platforms have added automation to their platforms, Denehy argues they’re too complex for SMBs.

Electric claims it has more than 300 clients such as medical offices, financial-services firms and advertising agencies, among others. Most typically have fewer than 500 employees, Denehy said, with a total number of employees supported being more than 10,000. The company provides routine troubleshooting, sysadmin support and employee enrollment and deprovisioning.

Denehy insisted that Electric isn’t trying to put MSPs out of business; in fact, the companyhas begun tapping various MSPs to provide “feet on the street” for customers requiring on-site setup and repair of systems, networks and other hardware.

“This is the stuff that we don’t want to be doing. And it represents the areas where they can make the most money,” he said.

Denehy said the funds raised from its latest round will go toward …

… expanding the delivery of its automated support services throughout the U.S. and aligning with MSPs in local markets to provide on-site services. Over the past year, Electric has already aligned with about a dozen MSPs throughout the U.S.

The revenue model is still evolving, but Electric provides its support-desk services and any SaaS licensing costs at a wholesale rack rate. MSPs can mark up those costs and charge  their customary fees for on-site services, Denehy said.

“They’ve got some flexibility,” he said.

Lance Stone, president of OnTimeTech, a 14-person MSP in San Francisco, said he was very skeptical when Electric first reached out to him.

“To be perfectly honest, my gut reaction initially was that they were trying to muscle in on my business,” Stone said.

Upon various discussions, Electric’s team persuaded him of the potential benefits.

“I’m very involved in the MSP business and I see that things are changing,” Stone said. “I don’t want to be led by the wayside, and this is an opportunity to work with something really interesting. Not only is their technology very interesting, but so is their approach to MSPs like me, which is ‘Hey, we want to collaborate; we’re not going to try to take your business.’ They just need some boots on the ground, and by working with them, they’ve given us a lot of work.”

While Electric hasn’t rolled out the complete chatbot functionality to MSPs it has partnered with, Stone said he finds it promising and is OK with the idea of implementing it.

“It’s hard to find talented tech people, so in some sense, it would allow me to grow faster,” he said.

AD.Visory Solutions’ Anoush D’Orville

Similar to Stone, Anoush D’Orville, CEO of AD.Visory Solutions in New York, was skeptical about Electric.

“I had heard all sorts of rumors that Electric was going to be the MSP killer, but after doing a little bit more research, it seems that they were more of a value-add than an actual destroyer of what all of us pegged our livelihoods to,” D’Orville said.

D’Orville said the model Electric is putting forward will add “structured professionalism” to MSPs, which he believes is lacking in many small shops.

“There’s a ton of data that flows through a lot of these companies that aren’t being properly operationalized,” he said.

Many prospective clients are scared to leave their existing service providers because they don’t really know what else is out there, he added. “So,they just end up in these almost abusive relationships where they’re held hostage by these IT companies that have their passwords or they’re afraid of what they’ll do. The MSP world needs a bit of a shake-up.”