Pax8 Secures $185M Funding Round, Says More Acquisitions On The Horizon

‘You can expect more acquisitions. Some will be like Sea-Level, which will be targeted at helping partners improve their operations. Some will be technology tuck-ins up and down the stack. This is something we haven’t done before. But it’s getting critical for our partners,’ says Pax8 CRO Nick Heddy (r., in photo).

MSP-focused born-in-the-cloud distributor Pax8 this week unveiled a huge $185 million round of funding led by SoftBank and said the investment gives Pax8 a valuation of $1.7 billion.

The investment in Pax8, which provides a cloud-based platform to help MSPs serve their SMB customers with a wide range of technologies, is big news not only for Pax8 but also for the channel, said Ryan Walsh (left, in photo), COO of the Denver-based company.

“This is a big demonstration of the market opportunity for the channel and the role companies like Pax8 plays,” Walsh told CRN. “It’s also a reflection on small and medium businesses and beyond, and on SoftBank’s recognition of this market.”

[Related: Pax8’s Walsh: ‘Let’s Educate And Keep Going’]

Nick Heddy, Pax8’s CRO, told CRN that it is good news to see a company like SoftBank recognize the importance of the MSP space.

“We expect to see this business expand faster and further than even we anticipated,” Heddy said.

With the investment from SoftBank Vision Fund 2, Pax8 is also getting two new board members with extensive experience in the channel, Heddy said,

The first is Nagraj Kashyap, a managing partner at SoftBank.

The second, Kristin Bannon, is an investment director at SoftBank Investment Advisers who has been close to SMBs, he said.

“We excited to have them come aboard,” he said.

Walsh said the investment will help Pax8 in four ways: geographic expansion, the scaling of operations to keep up with growth, future innovation, and the funding of potential acquisitions.

Pax8 has to date made four acquisitions. They include Sea-Level Operations, which provides MSPs with coaching and education to improve their operations; Wirehive, a U.K.-based consultancy; Resello, a Netherlands-based cloud services distributor; and TVG, a Latvia-based authorized Microsoft CSP Indirect Provider.

Heddy said three of the four acquisitions so far have been related to international expansion with the acquisition of international Microsoft partners. He also said Pax8 is already in talks that should lead to future acquisitions.

“You can expect more acquisitions,” he said. “Some will be like Sea-Level, which will be targeted at helping partners improve their operations. Some will be technology tuck-ins up and down the stack. This is something we haven’t done before. But it’s getting critical for our partners.”

“There’s a lot of cool things coming up,” Walsh said.

The fact that Pax8 unveiled its investment the same day Kaseya unveiled a plan to acquire Datto is a coincidence, but there is a common denominator, Walsh said.

“The thread is, there are big global institutional funds taking an interest in the SMB market,” he said. “It’s a challenging market to meet. And Pax8 is one company that really taps into that vein.”

Pax8 is just getting started, Heddy said.

“No one on our team is satisfied with the status quo,” he said. “We’ll process today’s news, and then move on to the future. We’re just getting started.”