Pax8 Secures $185M Round of Funding, Announces More Acquisitions on the Horizon

Cloud-born, MSP-focused retailer Pax8 unveiled a massive $185 million funding round led by SoftBank this week and said the investment gives Pax8 a $1.7 billion valuation.

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 chain, says Ryan Walsh (left, pictured), COO of the Denver-based company.

“It’s a great demonstration of the market opportunity for the channel and the role that companies like Pax8 are playing,” Walsh told CRN. “It’s also a reflection on small and medium-sized businesses and beyond, and SoftBank’s recognition of that market.”

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

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

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

With SoftBank’s Vision Fund 2 investment, Pax8 also welcomes two new board members with extensive in-chain experience, Heddy said,

The first is Nagraj Kashyap, managing partner of SoftBank.

The second, Kristin Bannon, is chief investment officer at SoftBank Investment Advisers which has been close to SMEs, he said.

“We are delighted to have them on board,” he said.

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

Pax8 has made four acquisitions to date. They include Sea-Level Operations, which provides MSPs with coaching and training to improve their operations; Wirehive, a UK-based consultancy; Resello, a Netherlands-based cloud service provider; and TVG, an authorized indirect Microsoft CSP provider based in Latvia.

Heddy said three of the four acquisitions to date were related to international expansion with the acquisition of Microsoft’s international partners. He also said that Pax8 was already in talks which should lead to future acquisitions.

“You can expect more acquisitions,” he said. “Some will be like Sea-Level, which will focus on helping partners improve their operations. Some will be top-down stack technology add-ons. This is something we’ve never done before. But it’s becoming critical for our partners.

“There are a lot of exciting things to come,” Walsh said.

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

“The common thread is that there are large global institutional funds that are interested in the SME market,” he said. “It’s a tough market to reach. And Pax8 is a company that really taps into that vein.

Pax8 is just getting started, Heddy said.

“Nobody in our team is happy with the status quo,” he said. “We’ll deal with today’s news and then move on to the future. We are just getting started.