At Alten Capital we focus on investing in growing, profitable lower middle market technology services businesses alongside founders and management team members. We enjoy being sector-specific. Here's why:
Technology Services Experience
We know the industry really well. After spending several years scaling tech services and software development companies, we came to appreciate the nuances of operating well-oiled, growing IT services global organizations. Every sector has its own characteristics, and the technology sector is no exception. Within tech, we believe there are three main layers: hardware, software and services. We spend time at the top of the stack: services.
The nature of services companies is such that they don't require capital expenditures to generate revenue, therefore they are financially efficient. Compared to a manufacturing facility, we don't need to invest in factories, or land, or machines, to produce widgets. Moreover, after the pandemic, we also saw a spike in working from home and remote work, which diminished the need for super large office spaces and campuses to house engineers and technical professionals. Overall, this reduces asset levels and streamlines the connection between the income statement performance and the balance sheet requirements. Less capital = more efficient.
The service delivered is intellectual in nature, which means services can be performed anywhere in the US or the world. There are not many blockers for scaling a services-based business internationally. Some regions of the world have become more mature in IT services (India), while others are garnering strong attention (Latin America). Geo-political risks have also caused turmoil in Eastern Europe and resource re-organization efforts continue under way. This international essence allows for creative solutions that otherwise would not be possible.
We don't see strong investment solutions for smaller tech services companies under $50 million in revenues. We believe this void allows us to focus on the smaller end of the spectrum and provide these companies with the financial and intellectual capital they need to get to their next level.
Please reach out to us to learn more about Alten Capital or to explore partnership opportunities. Let's create value in technology services together!