Evolve IP Scores Substantial Private Equity Investment With Eye On Channel Growth

Private equity firm Great Hill Partners Thursday purchased a majority stake in cloud service provider Evolve IP, accelerating the channel-friendly company's growth in the ultra-competitive cloud market.

The investment will give Wayne, Pa.-based Evolve IP the capital to increase its headcount, build on its products and services offerings, and boost its investment in the channel, Evolve IP said in a letter to partners.

Evolve IP offers virtual desktops, disaster recovery, unified communications and contact-center-as-a-service solutions to midmarket customers. The provider also has a robust channel program that includes VARs, telecom agents and master agent partners.

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Evolve IP has been a closely held, private company since its inception in 2007. Bringing in a senior-level partner was important to help get to the next level, said Scott Kinka, chief technology officer and founding partner of Evolve IP.

The cloud service provider's first priority is the channel, he said.

"To be frank, we needed more coverage. This is really about adding resources and geographically expanding to better cover our partners because we constantly hear our partners want to give us more business," Kinka said.

Petaluma, Calif.-based master agent Intelisys, Evolve IP's largest partner, told CRN that the investment will let Evolve IP grow out its channel more rapidly.

"They've been a strategic, go-to supplier of all things cloud for us for a while now. This will enable them to grow bigger and faster, which is a good thing for the channel," said Andrew Pryfogle, senior vice president of cloud transformation for Intelisys.

While Boston-based Great Hill and Evolve IP are not disclosing terms of the deal, Philly.com is reporting that the private equity firm is pumping more than $100 million into Evolve IP so the company can grow through acquisitions. Evolve IP told partners that the investment was "substantial."

Kinka said the funds will help Evolve "significantly" increase its investment in product development. Evolve IP bases its platforms on technology from leading IT vendors, such as Cisco Systems, VMware and Broadsoft, he said.

"We want to really expand on software and product development," he said.

The funds also will free up the cloud service provider for more strategic mergers and acquisitions, Kinka said.

"We are a buyer," he said. "We are considering other providers in the UCaaS side and the computing side, as well as IP software and solutions we can buy. M&A is going to be a huge push for us moving forward."

Evolve IP's current data center footprint includes six U.S.-based facilities. While Evolve IP doesn't have specific plans to build out more facilities at this time, the investment from Great Hill Partners will enable acquisitions that could come along with data center facilities, Kinka said.

Evolve IP, alongside Intelisys, is also is looking to expand beyond the U.S., Pryfogle said.

"They will be able to use this pile of cash they now have to grow domestically, but also a very significant International expansion," he said. "They'll be coming with [Intelisys] into London, Western Europe, and beyond."

The investment won't change day-to-day business with Evolve IP's existing partner base, but it could give partners access to additional resources and managers, Kinka said.

Evolve IP is no stranger to acquisitions, and has a strong track record of working through integrations really well, Pryfogle said.

"Their past M&A activity has not been destructive at all to the channel," he said. "In fact, it's opened up a lot more opportunities."

Evolve IP has made seven acquisitions since 2007, including cloud service provider A.P.T. Inc. and Webcore Technologies, a managed services provider.