Investors Pump Money Into Service Providers

Apparently, the economic crisis is easing -- especially in the service provider market, where investors are starting to pump money into the sector. Here's a look at multiple recent deals involving MSPs, hosting providers and aspiring cloud specialists. As a whole, the deals could represent a financial vote of confidence in the managed services market.

Here’s a summary:

  • Horizon Data Center Solutions, based in Plano, Texas, disclosed a new round of venture capital funding lead by Ballast Point Ventures . Horizon will use the $7.5 million minority equity investment to launch new data centers and boost its development of managed IT services and private cloud computing.
  • SupportSpace, which offers on-demand remote tech support services, said it has raised $10 million in funding. Emergence Capital Partners led the capital infusion along with BRM Group and Gemini Israel. Emergence Capital’s portfolio includes Salesforce.com and other SaaS players. BRM Group and Gemini Israel had previously invested in SupportSpace.
  • CyrusOne, a colocation provider, has secured expansion funding in the shape of a $150 million credit facility. Participating banks include TD Securities, RBC Capital Markets, SunTrust Robinson Humphrey and SG Americas Securities. The dollars will accelerate CyrusOne’s growth in its core Texas market, according to the company.
The capital influx may seem bold in the face of a still-tough economy, but sales pipelines for some firms are growing because of the economy.

“With the economy being the way it is, many firms are looking for a more efficient way to deliver IT,” said Jeff Kuerzi, vice president of marketing at Horizon.

And that may very well involve organizations outsourcing IT to a service provider, Kuerzi noted. Horizon, he said, provides services ranging from straight colocation to Exchange hosting and help desk services.

Kuerzi also cited customers looking to house data in a secure facility as another demand generator. Horizon operates SAS 70-audited data centers and works with customers with Payment Card Industry (PCI) requirements among other compliance concerns.

Going forward, Horizon’s new funding will help it add data centers in Northern Virginia and California. The former could help provide a base of operations for the company’s cloud computing business in the government space.

Kuerzi said the company plans to target government agencies with its private cloud product. Horizon introduced its FlexSafe Cloud offering in September.

In addition, Kuerzi said Horizon will seek to boost its business among Web 2.0 companies, SaaS providers, and companies in industries with high compliance needs.

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