Bluewave Takes $75 Million Columbia Capital Investment for Agent Acquisitions, Organic Growth

Bluewave Technology Group is harnessing $75 million in capital to buy agents and build a technology advisory and life cycle management company.

Bluewave on Monday announced the growth investment, which Columbia Capital led. The transaction is one of the largest the traditional channel partner space has seen, and it sets up Bluewave as an alternative to Upstack and other investment vehicles.

Columbia, which has notably invested in systems integrator Presidio, tech solutions brokerage Telarus and cloud advisory firm Cloud Sherpas, is entering the telecom expense management and agency space after a year of closely analyzing the industry.

“We are proud to partner with Columbia Capital, who understands the opportunity and growth potential for Bluewave,” Bluewave CEO Seth Penland said.

Bluewave’s Seth Penland

Bluewave has already put the funding to use. It has acquired a total of five partner firms and currently employs between 50 and 60 people. Its customers number over 1,000. Penland said the acquisitions put Bluewave among the top 20 agencies in the U.S.

Penland said Bluewave is targeting established agencies of 10 employees or more. Moreover, he said the company hasn’t set a goal for how many partners it wants to acquire. He said the initial capital raise will support both inorganic and organic growth.

“We’re really focused on building a great premium advisory life cycle management company that is going to be here for the next 20 years,” Penland told Channel Futures. “M&A is obviously a core part of that strategy. We’re well capitalized to pursue a lot of acquisitions if we find good targets that match our strategy and fit well within our culture.”

Managed TEM Services

Penland said the consulting company will perform the normal activities of a traditional brokerage/agency. That includes vetting a customer’s technology requirements and helping them source vendors and negotiate optimal pricing.

In addition, he said Bluewave will approach the technology stack in a more “holistic” manner. He said customers need more support and guidance across the entire life cycle. Bluewave’s services include technology evaluation, expense management and operations support.

“We’re really focused on making sure we deliver peace of mind to the CIOs and IT teams that entrust us with their technology decisions,” Penland told Channel Futures.

Bluewave’s Model

Penland said Bluewave Technology Group will differ from many of its competitors in its choice not to use 1099 contractors. Penland said the company will leverage the “employee model” rather than subagents.

“All of the Bluewave folks are and will be employees of the company. So we are building a fully integrated business, even though we’re acquiring multiple companies,” he said.

Moreover, Penland said the acquired companies will embrace the same brand, platform and approach.

Some of these acquirees bring niche expertise, whether in a particular technology or market. Penland said this diversity will help Bluewave build specialized technology practices, such as networking, cloud communications and colocation. One of Bluewave’s five acquisitions was a company that provides TEM services and traditional agent sales. Another focuses on TEM consulting, and another focuses on the midmarket.

Penland said he anticipates hiring more people in customer-facing roles, in addition to making acquisitions. Those positions include consultants, account executives and solutions engineers.

He said this emphasis on organic growth contrasts with other M&A options available to agents. Furthemore, many partners seek an investment partner because they lack the resources to invest in their own growth. he noted.

“Our strategy is is 100% centered on growth. This is not a cost-savings venture,” Penland said. “Oftentimes, in a more traditional roll-up or consolidation, it’s all about this financial arbitrage of putting a lot of businesses together and reducing cost. We want to …