Top Down Ventures Investing in Future of MSP Space

A venture capital firm with roots in the channel intends to use its newly closed MSP fund to help drive the latest products that no other company is considering yet.

Top Down Ventures announced on Monday that it had closed its $25 million MSP fund designed to provide funding to early-stage SaaS companies operating in the MSP marketplace. The MSP fund, launched by channel veteran Chris Day, will help three companies in 2024 launch their products and begin building their interests in this marketplace. The fund's general partners, Day, Joel Abramson and Mark Scott, bring decades of experience in the channel and hope to inspire some new products for the market.

Channel Futures sat down with Abramson to discuss the origins of Top Down Ventures, its goals, and its first wave of investments.

Top Down's Joel Abramson

Channel Futures: Where does the Top Down Fund come from?

Joel Abramson: Let's start at the beginning. Chris Day was one of the founders of Fully Managed, which is a large MSP that sold to Telus in 2022 in Canada, as well as the founder of IT Glue, which sold to Kaseya in 2018. Day founded Top Down Ventures in 2018 to help provide resources to MSPs in need. Since then, we've built this network designed to help find the right people and technologies that we think will impact the MSP space, invest in them, and help them scale and grow and build the best product. So we've been doing that out of Top Down since 2018, just with our capital. And so we've called that Top Down Capital. And about a year ago, we decided to launch a fund that would bring together capital to keep doing that. And so that's what the fund is. We got Mark Scott in as our third partner, and he was the founder of N-able and the CEO of Fully Managed when it sold to Telus. And so Mark, Chris and I have been just together for a long time. And we thought, what a great opportunity to bring a bunch of capital together and then get those to make a bunch more investments in the MSP software space.

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We're launching with a group of LPs that we're investing on their behalf. We did our first close at $10 million, and we'll make the first three investments here this year out of that. Then we'll have a second closing next year, and we anticipate it will be around the full $25 million. And then we'll make another seven investments out of that. The funding is all intended to help these companies grow, expand their offerings and get exposure in the MSP space.

CF: Who are the companies chosen for this first initial fund?

JA: I can't share the companies' identities yet because they're not closed. One will be closed here in a couple of weeks, and the other will likely be closed at the end of November. The first batch is all cybersecurity-focused, though.

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One of the principles we've discussed at Top Down is the concept of "blue ocean SaaS." And so blue ocean SaaS is this new category with an expanded horizon of features where they're not just another competitor in a saturated space. And so we look to bring these new or evolved technologies to the space because it's important for MSPs to understand what's around the corner and what their service offering will be three to five years out from now and be investing in some of those technologies early. That's why you won't necessarily see us invest in really well-trodden paths of products or categories. We're much more excited about the next horizon of software that MSPs will use and bring forward or bring down to their customers.

CF: What role will you hold in helping the companies going forward?

JA: We intend to be very hands-on. So we work together with the founders on strategy and understanding how we will impact the MSPs and their end customers. That includes making sure they have the right technology and partnerships. Some of these companies are not necessarily MSP native, and so they've been built by folks that are coming in from enterprise software. We really want to help them understand what's vital to MSPs and then build to serve those kinds of top priorities within the MSP space.

CF: What are you looking for in a prospective investment?

JA: Cybersecurity is one of our big focuses. We're really interested in how Gen AI is going to impact the MSP space and its customers and how it will tackle data readiness. Another important theme for us is productivity and the next wave of companies addressing the 80 percent of SMBs that are all focused on people and productivity versus the 20 percent that are IT and infrastructure.

Other themes include automation. One of the things that we look at when sourcing prospective investments and meeting founders is we have an eye on what's driving the enterprise space. These could be companies like Salesforce or Workday in hopes of understanding what their platforms look like and what gaps exist in the MSP and SMB market.

CF: What should investors and interested parties expect from Top Down in the future?

JA: We'll do our final close in 2025 to get the fund to $25 million. After that, we'll make another call at seven investments out of the fund to try and get to around ten. By 2026, we expect to be raising a larger fund, around $200 million as a growth fund entirely focused on the MSP space. So we just see the 10-year horizon for space continuing to grow. And we want to continue to provide scaling expertise as well as capital to these MSP software companies.