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:
We know the industry really well. After several years of scaling tech services and software development companies, we appreciated the nuances of operating well-oiled, growing IT services in global organizations. Every sector has its own characteristics, and the technology sector is no exception. We believe there are three main layers within tech: 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, land, or machines to produce widgets. Moreover, after the pandemic, we also saw a spike in working from home and remote work, diminishing 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, meaning it can be performed anywhere in the US or the world. There are not many blockers to 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). Geopolitical risks have also caused turmoil in Eastern Europe, and resource reorganization efforts are underway. 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 reach their next level.
Please contact us to learn more about Alten Capital or explore partnership opportunities. Let's create value in technology services together!