During the pandemic, technology truly showed its value to businesses. Many technologies that were slowly being adopted by businesses were instantly thrust into the spotlight. These technologies saved hundreds of millions of jobs because they allowed work to be done from anywhere. Food delivery apps, ecommerce, collaboration and unified communications as a service (UCaaS) were just a few of the many crucial technologies that kept economies from totally cratering and allowed millions to keep working – and kept businesses operational.
It wasn’t just the technology itself that gained value during the pandemic. As they were transitioning from traditional office settings to remote work, businesses also realized the crucial importance of outsourced IT teams – managed service providers (MSPs). Those who were already working with MSPs leaned on them to support their transitions to remote and, now, hybrid work. Many others struggled initially because they didn’t have the in-house expertise or the technology to facilitate a transition. Many of them sought out MSPs for the first time to support the workforce shift and operational continuity and to build successful remote work environments.
As MSPs scrambled to support customers, reliable UCaaS solutions became a critical component of their service portfolios. Many companies were using legacy or on-premises solutions that don’t translate easily to remote work environments. Some tried initially to use basic call forwarding and other band-aid solutions, but quickly realized they were losing critical functionality and both internal and customer-facing communications suffered. Even MSPs who had never sold communications understood how important UCaaS is for facilitating effective communications and how important it had become almost overnight. For MSPs, the question is, which UCaaS model should they sell?
Many MSPs sell branded UCaaS solutions, where they set pricing and are paid on commission, say 15%. Of course, there are challenges with the branded model. Commissions are subject to change and many UCaaS providers have been known to poach customers from their MSP partners or compete with them for market share. This is one of the reasons white-label UCaaS has grown in popularity among MSPs.
One of the biggest advantages of white-labeling is that MSPs are able to brand their UCaaS services are their own, have more control over pricing, and create tighter relationships with their customers. In addition to pricing flexibility, MSPs have an opportunity to build brand value by combining services into customer- or vertical-specific packages. They also don’t have to sacrifice support. A good white-label provider understands that, even though their partners aren’t selling a branded solution, offering support is a winning proposition.
Of course, there are many UCaaS providers offering white-label solutions today, but not all have taken a pure-channel approach. Many still sell direct and MSPs run the risk of being pushed out of relationships by competition from their own providers.
RingLogix isn’t one of them. It is an MSP-focused white-label UCaaS provider that doesn’t compete with its partners. The rapidly growing company boasts ultra-low churn rates and a single-pane-of-glass UI, which minimizes “swivel chair” operations. The basic idea is the UI makes configuration and management of customers’ communications needs simple for MSPs. It allows them to quickly and easily configure clients’ communications, while affording them more time for other tasks.
Boasting hundreds of MSP customers, RingLogix was formed in 2019 when investment was added into a company called 3NG to form a new entity focused on maximizing MSP communications profits – and one that does not compete with its MSP channel. After three years of continued growth, RingLogix recently raised a Series A round of $3 million to drive further growth in a market flush with opportunity, as more and more traditional MSPs get into the communications game to create more compelling value propositions and deepen customer relationships.
Albert Diaz, CEO of RingLogix said, "These investment proceeds will be used to turbocharge our product development, bringing more integrations and new solutions to help our partners expand their business and grow their profits."
MSPs that white-label communications solutions see many benefits, beyond just higher margins, according to Diaz. They can also achieve higher business valuations if and when they decide to exit – and the MSP market it rife with M&A these days. The logic is that prospective acquirers value revenue from a white-label service more than commission-based revenue, where the terms could change. In addition, when MSPs choose to work with channel-only UCaaS providers, they no longer have to worry about their communications supplier competing for their customers, creating greater revenue security.
RingLogix’ investment came from MK Capital, a successful VC that has previously invested in Nerdio, Unitas Global and CellTrak. The firm has a successful record of investing and assisting in the growth of its portfolio companies.
“The RingLogix investment was a natural for our firm. We have successfully invested in and aided in the growth of infrastructure software companies, as well as those who target MSPs,” said Bret Maxwell, Managing General Partner of MK Capital. “RingLogix was directly in our sweet spot and we feel that, with the market momentum the company has, along with its superior leadership and the increasing importance of MSPs in purchasing decisions, RingLogix is well-positioned for years of rapid growth and success.”
The investment banker involved in this transaction was Rich Tehrani of RT Advisors. If that name is familiar, it is because Rich is also the CEO of our parent company, TMC and conference chairman of the ITEXPO #TECHSUPERSHOW, which will be taking place for the 40th time in February 2023.
"I am thrilled to be, on behalf of RT Advisors and Four Points Capital Partners, LLC, the investment banker involved in this Series A capital raise,” Tehrani said. “Throughout the process, RingLogix demonstrated effective product-market fit and its management has a solid vision for the future, as well as the ability to execute.”
As for the investor, Tehrani added that, “MK Capital’s understanding of the markets and long-term investment outlook makes it a natural partner for tech companies looking for more than just capital. MK Capital brings a wealth of experience to its portfolio companies, which aids in faster growth and more successful exits.”
The U in UCaaS stands for unified – but it’s not just traditional communications that has become more unified over the years. Collaboration tools, CRM, productivity, marketing automation and other business applications have become more integrated through APIs, product extensions and M&A. Salesforce purchasing Slack, and Zoom launching a phone service, are just a two examples of this phenomenon.
The winners of tomorrow will be the companies that help integrate disparate applications, like communications and collaboration. The IT industry is in a state of perpetual flux – partly due to innovation and partly because of the constant M&A. Either way, the result is that trusted partners, like MSPs, will continue to play a key role in helping companies figure out not only which solutions are best for them, but help companies implement and leverage them effectively within their operations.
To that end, vendors selling through MSPs are in a great position to bring new offerings to the market, whether they are organic add-ons or the result of M&A. It doesn’t hurt that those who embrace UCaaS are riding the coattails of a technology that proved to be essential during the pandemic and to this day is enabling hybrid workers to be productive from anywhere – a trend that most say is now a permanent part of business culture.
RingLogix is exhibiting at MSP Expo 2023, part of the #TECHSUPERSHOW, being held February 14-17, 2023 at the Greater Fort Lauderdale/Broward County Convention Center in Fort Lauderdale, Florida. At MSP, you’ll have a chance to not only meet with RingLogix and other technology vendors, but hear from dozens of speakers to about the latest trends in the MSP space, opportunities for building out your service portfolio, proven marketing and sales strategies, and much more. MSP Expo is the premier conference and networking summit for MSPs. This is where MSP business owners and technology specialists share strategies to grow their managed services businesses. RingLogix will be in booth #640 on the exhibit floor.
Edited by
Erik Linask
