Super Microsoft SI New Signature Gets $35M, Names New CEO

New Signature has received $35 million in private equity and several new executives as the 2014 Microsoft Partner of the Year looks to triple the size of its business in the next two years.

The Washington, D.C.-based system integrator said it plans to use the money from Columbia Capital to expand its physical footprint outside the Northeast and increase its technical capabilities around Azure, Office 365 and Dynamics CRM Online.

"It's a lot of money," Chris Hertz, co-founder of New Signature, told CRN about the investment. "It's going to take us a long way."

[Related: XChange 2014: How MSPs Can Make Money With Microsoft Azure]

Hertz is expecting the money will take New Signature's employee count from 90 today to at least 180 -- and perhaps 270 -- in the next 18 to 24 months. And he's hoping the investment will enable New Signature to hit the $500 million annual revenue threshold within the next five years.

But the deal with Columbia Capital is about much more than funding. Jeff Tench and Neil Hobbs -- who ran cloud video managed services company Teliris until it was sold to Dimension Data in May 2014 -- will also be joining New Signature as CEO and chairman of the board, respectively, while Pat Paquette will become chief financial officer.

Hertz will become president of New Signature, overseeing day-to-day operations and reporting directly to Tench. Tench will look more at strategy, Hertz said, specifically focusing on ways New Signature can scale and expand its business in the years ahead.

"Jeff [Tench] has gone and built companies through acquisition before," Hertz said. "I've never done that."

New Signature plans to use the infusion to money to simultaneously pursue both organic and inorganic growth paths. New Signature has grown its Microsoft project revenue by 70 percent over the past year, Hertz said, thanks to its ability to service every Microsoft on-premise or cloud workload, along with its laser-like focus on mastering and deploying the latest Microsoft offerings.

"Most Microsoft partners are not prepared to help their customers through this journey to the cloud," Hertz said.

From an organic standpoint, New Signature plans to begin by hiring people with expertise around infrastructure, application development and DevOps for Microsoft-based cloud technologies in locations where the SI already has offices.

Those hires should help eliminate the five- or six-week delays from when existing customers sign a service agreement to when work actually begins, Hertz said. Once New Signature has extended more scale and capabilities to its existing client base, Hertz said, the company will begin pursuing new customers across the Northeast and start looking into geographical expansion.

All of New Signature's offices are between Boston and Raleigh, N.C., Hertz said, and the company has set its sights on deepening its reach and physical presence into the southeastern United States.

"It's pretty clear that we'll head south as one of our first steps," Hertz said.

New Signature is most interested in acquiring or merging with companies that can add sales, marketing or technical capabilities in both existing and new markets, Hertz said. The company already has strong opinions on which partners in the Microsoft ecosystem are driving change and enjoying success, and plans to pursue conversations with those top solution providers.

Although Columbia expects its investment in New Signature to drive rapid growth, the equity firm isn't looking to cash out anytime soon. Hertz said Columbia typically holds its investments -- which have included Presidio and Cloud Sherpas -- for seven to 10 years before exiting by way of an initial public offering or strategic or financial sale.

"From everything I've seen and heard," Hertz said, "they're a very patient, long-term investor."

PUBLISHED APRIL 22, 2015