infoTECH Feature

April 14, 2022

As IT Networking, Applications, Computing, and Real-Time Communications Move to Full Cloud, Pax8 Fuels Growth of Marketplace

Though cloud computing can trace its origins all the way back to the 1960s, it's only recently that the technology has become common for organizations to use and is seeing steady and substantial growth. In fact, in 2020, the total worth of the global cloud computing market was USD 371.4 billion and is expected to reach an estimated USD 482 billion in 2022. Past this, the market is predicted to grow at a CAGR of 17.5 percent, which would bring the market value all the way up to USD $832.1 billion by 2025.

One company saw this transformation and growth coming and established a novel e-commerce style marketplace focused on the needs of the massive SMB/SME market and simplifying operations for the Managed Service Providers (MSPs) who serve small and medium enterprises.

Earlier this week, Pax8, a company established in Denver, Colorado, ten years ago, announced a $185 $185 million in new equity capital from new investor SoftBank Vision Fund 2, increasing the company's valuation to $1.7 billion. SoftBank Vision Fund led the funding series with additional contributions from existing investors, Catalyst Investors, Sageview Capital, Blue Cloud Ventures, and Liberty Global (News - Alert) Ventures. As part of the transaction, Kristin Bannon, Investment Director at SoftBank Investment Advisers, will be named to the Pax8 Board of Directors.

Pax8 has cloud-enabled more than 200,000 businesses with its 20,000 managed services partners and its award-winning platform, marketplace, education, support, and solutions. The company offers organizations a unique approach and simplifies the IT buying experience for small and medium-sized businesses (SMBs) through the IT channel ecosystem. Pax8 solves challenges around billing and provisioning and provides the automation businesses require for scale.

"As we continue to evolve our technology and marketplace to meet the needs of SMBs, the new investment will provide capital to accelerate innovation and continued expansion into new global markets," said John Street, CEO at Pax8. "This strong funding round reflects the powerful work Pax8 is doing to enable and grow SMBs through our partners, employees, technology, education, and support. Year over year, we continue to experience record-breaking growth, and we look forward to working with SoftBank to continue elevating our performance."

"Pax8 has disrupted the IT industry, exemplified courage through innovation, and has built the people, processes, and technology to revolutionize the way businesses build and consume technology," said Nagraj Kashyap, Managing Partner at SoftBank. "Under John's leadership Pax8 has shown ongoing success, and we believe its vision for the future will prove to be transformative for B2B markets."

"Through its marketplace, Pax8 is empowering SMBs with technology solutions they would otherwise not have access to while simultaneously granting software vendors distribution capabilities to a hard-to-reach customer segment," said Kristin Bannon, Investment Director at SoftBank Investment Advisers. "I am thrilled to join the Pax8 Board and partner with the company on its hyper-growth technology strategy for the platform and cloud marketplace and new opportunities for the company and its ecosystem of partners."

Back in 2012, John Street, Pax8 co-founder and CEO realized there was a glaring need for a modern distribution channel for cloud IT service providers. Along with Chief Strategy Officer Klaus Dimmler and Chief Operating Officer Ryan Walsh, Street founded Pax8 with the goal of simplifying how partners buy, sell, and manage cloud.

"The Pax8 team has done a phenomenal job across every aspect of the business, from product development to sales, marketing, and customer experience," said David Walsh (News - Alert), who sits on the board of Pax8. "As beneficial as the cloud can be to a company today, not every business is able to leverage the technology properly. This rings especially true for small and medium enterprises who either don't have the necessary wealth to set up cloud technology or don't have the technological know-how on staff to do it themselves. For these businesses, the solution to this problem comes in the form of managed service providers, and more and more of these MSPs are discovering Pax8's marketplace as a way to simplify and automate their businesses."

An MSP delivers services, such as network, application, infrastructure, and security, via ongoing and regular support and active administration on customers' premises, in their MSP's data center (hosting), or in a third-party data center.

"To compete in the rapidly growing SME market, MSPs have worked hard to become IT experts, across all functional areas, including trials, beta tests, project management, installation, training, monitoring, maintenance, upgrades, and especially customer support," Walsh explained. "What Pax8 does is dramatically simplifies provisioning of services, in the context of providing professional managed services bundled with the applications, communications, cloud, networking, cybersecurity, and every other technology service SMEs need to operate successfully. The infusion of equity this week will enable Pax8 to expand and evolve to serve tens and hundreds of thousands more MSPs and, by extension, their customers."

The global managed services market was valued at USD 161.37 billion in 2021, and it is expected to reach USD 311.32 billion by 2027, registering a CAGR of 12.44 percent between now and then. It's through their newfound digital expertise in which MSPs are able to adequately provide and set up cloud and other technology for SMBs, which has been crucial to the MSP industry's recent growth. According to Datto, on average, MSPs report a client base of 122 clients, and about 60 percent of the MSP's clients have between 1-150 employees.

Prior to the SoftBank funding announcement, Pax8 had been granted the Agreement for Online Services-Government designation to enable Managed Service Providers (MSPs) to service the public sector with Microsoft (News - Alert) solutions. 

"MSPs selling into the public sector now have access to simplified cloud solutions, scalable technology, and support from Pax8 through the AOS-G designation with Microsoft," said Nikki Meyer, Vice President of Vendor Alliances at Pax8. "As part of our focus on enabling MSPs to build successful practices supporting the public sector, Pax8 will launch a series of workshops, providing education and training to all MSPs with customers providing services or transacting with the Department of Defense (DoD)."

With the AOS-G designation, Pax8 is authorized to offer all MSPs who interact with the public sector supply chain, providing Microsoft's GCC (Government Commercial Cloud) and GCC High and DoD environments for federal IT customers and contractors that need to comply with advanced NIST, FedRAMP, and ITAR standards.

Then, on the heels of the SoftBank funding announcement, Pax8 announced a new North American Distribution Agreement with Amazon Web Services (News - Alert) (AWS), the world's most comprehensive and broadly adopted cloud platform.

Pax8 will leverage AWS to enable managed service providers (MSPs) in North America to build public cloud applications with increased flexibility, scalability, and reliability. The solutions will be widely available for Pax8 partners in May.

"As a leading cloud marketplace for partners serving SMBs, Pax8 is thrilled to expand our multi-cloud management services through working with AWS," said Ryan Walsh, Chief Operating Officer at Pax8. "With our technology, education, and enablement, we can help partners overcome the cloud management challenges around cost, as well as the risk of over-provisioning. We expect to see rapid adoption of public cloud in the SMB market across our ecosystem of partners and more than 200,000 businesses."

Some of the most popular products in the AWS library of consumption-based solutions will be available for Pax8 partners who want to provide their clients with a secure, technologically advanced, scalable platform for growing their business. For MSPs migrating workloads into the public cloud, spinning up VirtualBox's (VMs) for clients, or refactoring applications for cloud deployment, Pax8 will offer an AWS-certified team of experts to ready partners success with their IT infrastructure projects.

"The work with Pax8 will open incredible opportunities for SMBs in the IT channel to scale their cloud-management strategies and grow their businesses with AWS," said Jeremiah Jenson, Global Leader—Distribution at AWS. "We see tremendous opportunity for new and incremental revenue streams with the channel. The relationship with Pax8 is a testament to the value and opportunity we are seeking to provide the channel."

Pax8 will offer more than 250+ AWS solutions, including:

Amazon Elastic Compute Cloud (Amazon EC2): Offers the broadest and deepest compute platform; with over 500 instances to choose from, Pax8 partners can pick the CPU, memory, and storage that best suits their workload needs. Additionally, it is the only cloud to provide 400 Gbps ethernet networking.

Amazon Simple Storage Service (Amazon S3): For Pax8 partners who are ready to take on big data analytics, artificial intelligence, machine learning, and high-performance computing applications, Amazon S3 offers industry-leading scalability, data availability, security, and performance.

"Our team is excited to see AWS being added to Pax8's offering," said Dan Johnson, CEO at machineLOGIC. "With customers increasingly using multiple cloud providers to drive their businesses, partners have an opportunity to deliver multi-cloud solutions by leveraging AWS services for backup and disaster recovery, IaaS, cloud storage, and more. We've been AWS partners for many years, but we lacked solid go-to-market and training resources beyond what AWS could offer us. With Pax8's proven track record on partner enablement, it will be great to see how Pax8 empowers partners as they adopt AWS to drive that multi-cloud strategy."

"It's been a busy and exciting week for the team at Pax8," Walsh said. "For MSPs to be able to offer cloud services that allow their clients to benefit from the variety of innovative technologies available, they themselves must leverage cloud service platform technology that allows software and hardware products to co-exist remotely and at scale. The Pax8 team envisioned this early on, and today are leading the way in providing a fully vetted range of solutions, including those from the largest tech companies in the world."

Cloud platforms aid MSPs by removing the headache of managing cloud infrastructure by providing a consistent set of services, allowing them to achieve data security, manage applications, secure networks, and more with reliable tools. Also, with these intelligent cloud management tools that reduce the complexities of public cloud-native tools, this technology allows MSPs to create competitive differentiation in the market by delivering new products and services, on top of offering the cloud services that are highly requested.

"As demand for public cloud MSPs continues to escalate with customers attempting to move, activate, manage, and optimize workloads," Walsh explained, "MSPs are increasingly looking for a cloud service platform that fits their needs and helps them meet the requirements of their customers. There is no better platform for MSPs serving SMBs than Pax8, and with this infusion of capital, and deepening relationships with companies including AWS and Microsoft, Pax8 is unstoppable."

Edited by Maurice Nagle

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