ConnectWise Capital Invests in CharTec, HaaS
Investment money is starting to flow into the hardware as a service (HaaS) market. A prime example: ConnectWise Capital today announced a “joint venture” with CharTec — which specializes in hardware as a service. Financial details of the relationship were not disclosed. But here are some perspectives.
According to a joint press release, the:
“CharTec HaaS program enables IT Service companies to offer computer hardware and software to end users with no upfront capital investment.”
The release also states:
“CharTec is the first recipient of funding from ConnectWise Capital which will incubate innovative solutions to be sold exclusively through the IT channel.”
CharTec, launched by the founders of ARRC Technology, has about 160 partners that promote HaaS to their end-customers.
Rumors about a ConnectWise-CharTec surfaced in late 2009. By January 2010, ConnectWise had unveiled ConnectWise Capital, a $20 million fund to incubate channel-centric technology companies. Some readers took me to task for our coverage, pushing for more details about how ConnectWise Capital would be funded. ConnectWise COO Santo Cannone filled in some of the blanks, but some questions remain.
Specifically, how much money will ConnectWise Capital pump into each company? What are the terms of each investment? What time horizons are involved? And what are the exit strategies? As a privately held company, ConnectWise doesn’t have to disclose such extensive details. But I’m still curious about all of those questions.
Next Moves
More moves are coming for both ConnectWise Capital and CharTec.
Later this week, MSPmentor expects CharTec and Level Platforms to announce a strategic relationship with one another.
The timing certainly seems right: Interest in Hardware as a Service (HaaS) is surging. Roughly 47 percent of MSPmentor 100 survey participants say they are embracing HaaS as a recurring revenue opportunity. (Complete survey results for our third annual survey will be unveiled February 10.)
Still, mastering HaaS can be tricky, since MSPs want (A) the benefits of recurring hardware revenue without (B) the risks associated with owning hardware or holding debt on behalf of a customer. CharTec’s strategy apparently mitigates those risks.
Meanwhile, I suspect ConnectWise Capital may make one or two more investments within the next couple of weeks.
I don’t want this to come across wrong but what is there to invest in here? From what I have seen Chartec like many other HaaS solutions doesn’t amount to more than a clever bank/funding agreement. The copy machine guys have been doing this for decades (pass through fees and all).
Hi Andy: I’ll avoid the temptation to speculate about how the money will be used. But next time I speak with CharTec CEO Alex Rogers I’ll be sure to ask him.
-jp
Andy,
Thank you for bringing up this point–I actually get to respond and correct this perception quite a bit.
The value in becoming a CharTec partner goes way beyond HAAS and being the “financing.” In fact, that is by far the easiest part. You said it yourself – it’s just simple banking.
What you are not seeing or privy to if not a Partner, is the ongoing CharTec Academy education on servicing and selling manage services with or without HaaS. Our Partners face everyday business challenges with HR, Marketing, Collections–even Project Management. We open the doors to our 18 year old MSP practice (ARRC Technology) and offer the “Keys to the Castle” on any of these topics (and more). Our CharTec Partners benefit from this experience and other shared ideas we gained while servicing Central and Southern California for almost two decades.
The fact that CharTec is a “Channel Friendly Partner” is another difference. We provide workstations, firewalls, servers, VoIP and more – all private labeled with the Partners logo. We want to promote the Partner and build their business and brand awareness. This is a true Partner/Vendor relationship that the Channel can trust.
To use your example of the copier companies and assume for a moment that industry took on the same teachings as CharTec, it would be a whole different story. Not only would you receive your copier, paper, toner, staples, paperclips and service for one low monthly cost, but you would also receive extensive knowledge and training on desktop publishing services, letter writing etiquette, website and graphic design. I could also see the copier industry including English and grammar lessons in this offering as well. I am sure you are getting the point. Once these extra values are presented, the hardware is just a small piece of the entire offering.
With that being said, “ What is there to invest in here” you say?
Well, ConnectWise saw this…
• Research and Design, which keeps the products CharTec offers cutting edge and allows us to solve challenges with current offerings, such as VoIP, UTM, IP Surveillance, and more.
• Marketing and design using tools with trackability for a well thought out and traceable campaign.
• Expertly trained engineers and professionals ensuring Partner training and problem solving success.
• Integration with RMM
• 24×7 Helpdesk
• Future cloud solutions—this is a big one
I could go on and on…
But remember, ConnectWise created the ConnectWise Capital fund to identify channel-only focused companies and build industry leaders to help the IT Nation.
That is what the real investment here is. Your future and ability to survive the next 10 years in our industry. I’m saying your worth the investment. Hope you think so, too.
Alex Rogers
CEO
CharTec LLC
Alex: Thanks for sharing your thoughts on MSPmentor. We’ll be watching… and we’ll certainly be curious to see how CharTec and HaaS wind up in the cloud.
-jp
I still find myself dissapointed with the investment. OEM computers paired with elusive interest rates seems like the worst of both worlds. The copy machine guys don’t call a lease/loan a HaaS agreement, so why are we?
My DVR from the cable company is probably the only true “HaaS” I can think of today. I can add several to my plan one month, and return them 4 months later. No credit checks or tax returns required.
I also want to note the MSP world seems to be “drowning in value”. I understand people are out there looking for a business model to latch on to but the epidemic of vendors offering coaching services is borderline insulting. It is nearly impossible to engage a new vendor without the sales rep trying to convince you that you really need their “how to be an MSP” bootcamp. This pretty much applies to any sales engagement I’ve endured in that last 12 months from RMM and PSA tools to Help Desk brokers and now finance companies.
I have great respect for Arnie as a fellow entreprenuer and as an innovator. I had hoped this fund would go towards ventures that are providing more “lean” offerings.
I dont intend to flame Chartec or Connectwise here. I just felt like putting my thoughts on the matter out there.
Hey Alex,
I appreciate Andy’s sentiment, certainly understand where he is coming from and particularly enjoy his eloquent articulation of it all….but, I do have to say that after being ‘academized’ with the solutions Chartec has given me, I selfishly hope his feelings are echoed by any competing MSP’s in my market….after being armed with the Chartec sales, marketing and opertaional arsenal I will enjoy the competitive advantage.
Arnie is a pretty smart guy and my gut says that MSP history books will agree on this move.
All that said, Alex, you certainly piqued our interest with the last bullet point on Future Cloud Solutions…..please lift the haze on that one!! (at least to your minion of partners!!)
amc
Anthony: Arnie Bellini described his vision for a channel-centric cloud in a video (see video #2) from the November 2009 ConnectWise Partner Summit. I think it’s safe to say ConnectWise Capital hopes to connect the dots between HaaS and that channel-centric cloud strategy…
-jp