Shield Technology Partners raises $100M from Thrive Holdings to bring AI to SMB IT services via acquisitions

150,000 organ 150,000 organizations use it to keep their apps working. And

up next,

we have Jim.

Jim from Shield. Welcome to the TVP and Ultradome.

What's happening?

Good to see you. Thank you for having me.

It's great to have you here. Uh quick intro on yourself and what you're working on.

Yeah, my name is Jim Ciders. I'm the CEO of Shield Technology Partners, which is an IT services platform uh in cooperation with Thrive Holdings. We're bringing it uh powered by AI to all these small and medium businesses all across America. Finally, that's the goal.

We've been begging for this. No, we've been we've been excited to

I've been begging for it, too. Like what took so long? That's

I know. Exactly. Um so you raised 100 million from Thrive today. Uh when this has been in the works though for what like 18 months?

Uh a little less than that. I mean it's it's a long-term relationship, right? Like the whole company was founded in a partnership that included Thrive Holdings at the beginning and which is when I got involved kind of in the conversation long before I joined as CEO. And all the way through it, we've been thinking about how does uh how does holdings support with the strategic investment this kind of thing, right? We're building this thing for the long term. So, we want to make sure that we have the the war chest necessary to do the right stuff now.

Yeah. Amazing. What uh what do what do the early customer relationships actually look like? I know you're buying some existing companies, so you're inheriting uh customer base everywhere you go. I'm sure you're shedding some and then and then scaling from there. But uh what is what is the uh in the most simple way, what does a business actually look like? Uh what does the work look like today?

Yeah, hopefully we're shedding as few as possible. I mean, the idea is we're buying quite good ITMS MSPs all over America who have successful customer bases, um who have long-term relationships with folks, um uh and we're leaving them in place, right? We're leaving those customers. We're leaving the people who founded the business, the engineers and technicians who build those relationships. Then we layer on AI and other proprietary stuff on top of it. And the whole goal is that those customers are actually clamoring for more, not churning because they just got bought by a their their IT guy just got bought by a private equity firm or something, right? And so far, to the direct answer to your question, that's been pretty much what we're hearing. You know, we we hear customers going, "Oh, I heard I heard this thing happened. Can can you bring some of these Thrive guys over here to talk? Can you bring some Shield guys over here to talk to us about uh about what we can do with it? We're curious about it and we've never had access. That's exactly the point. That's that's the whole thing we're going after.

Makes a lot of sense.

What uh what how how are you thinking about the broader market and and what companies in the in sort of like the the small and medium-siz business categories are like most ripe for getting leverage out of AI? we've been tracking, you know, the like the ramp AI adoption metrics. Obviously, every tech company has a bunch of subscriptions. Uh, and then you go down the list and it's who you think and it's like the logging company hasn't adopted AI yet, but what what do you think is underrated right now?

Well, I mean, the logging company is a great place to start. I mean, the thesis is on our side, there's a there's a lot of companies in the real economy, Yeah.

that would benefit from the same kind of things that's creating, you know, AI creating durable value for large enterprises, right? The same thing that should help Airbus or Riotinto or whatever should also help like a regional roofing company or or a dentist office chain. Um, so really the customer selectivity, that's not really where where my emphasis is at this point. What I'm looking for is the IT service businesses that have built these really durable relationships where we get access to problem spaces that we haven't yet seen in the real economy because there's going to be something that we that falls out of it the lived experience of those IT technicians that we can use in the product motion. At least that's the

Yeah, that makes a ton of sense. Can you can you help me understand your thoughts on the like the the customization of software? Are we going into it feels like we're going into a world where more and more c more and more software will be custom. There's already big companies that you know Palunteers, Salesforce, these companies go in and they have a backbone but then they're doing a lot of custom implementation. There's companies you can hire that will build something completely bespoke for you whether that's like a consulting group. Uh but then typically, you know, if you're buying a piece of SAS off the shelf, they're not really doing anything for you. But it feels like now they can with a forward deployed uh salesperson, forward deployed engineer. How are you how do you think about that trend and like how like we're here? We have like a few vibecoded custom systems uh that you know a small 10person team a few years ago. We definitely not have um

I can't tell if we're just early adopters of the technology or if this is the future.

Well, there's a few ways I can answer that. I mean, first I got to confess to a bias, right? Right. I mean, I was a challenger for a long time for a reason because I think the the combination of first principles thinking and the forward deployed motion

does yield differentiated results, right? You can see in that company's results that that's true and in their customers results that that that's true.

I think the thing that lets your team benefit from vibe coding a thing that you wouldn't have had access to previously should benefit and can benefit a bunch of different ranges of businesses, right? Yeah. And really the thing that's been holding anybody back from that is is economic models more than anything, right? So like if if I'm founding a SAS company, I my investors expect a certain kind of multiple. We expect a certain type of product motion and go to market motion that I have to develop a product from afar, find a customer for it. It has to be designed to be salailable, right? And so at that point if it's not informed really if you didn't get your product management motion really really well right out of the gate it's kind of good luck that it creates durable value for anybody. Whereas if you do this inside out development motion that we've seen like I was saying creates all this value in the in the large enterprises you can find a way to get access to that same problem space bring that caliber of engineer to the to the work face to the mind face my the thesis is my belief is that it's going to actually produce the same type of differentiated results which I I think the crisp answer to your question is yeah I think I think customized software like inside out development however you want to call it forward like we forward deploy ourselves to vibe code things like that's I think that is the future. No question.

How how is traditional private equity kind of reacting to the to the shields of the world.

Uh smart, you know, very sophisticated financially, can raise plenty of money. They're well aware of AI. They think it's going to be important. You're coming in and you're competing to acquire businesses that might have landed with them historically. I'm imagining you have a very uh a pretty exciting value proposition. your the team is has an amazing track record, incredibly tapped in, well capitalized. You're saying like we want to retain your whole team. We want to keep all of your customers happy are we want to create more value here by by growing the business and growing earnings through just like really expanding the customer base. So it seems really uh appealing to uh to to the seller of a company, somebody that a business owner. Uh but of course private equity is not going to just kind of roll over. Uh how how how have they reacted?

Well, I mean I anecdotally it seems to me like they're trying to figure out how to get to this same type of goodness. I mean I you know I'm not I'm not in private equity so I'm talking out of my wheelhouse. But I mean, one could see that with the amount of competition in the IT small and medium business space for roll-ups, just traditional private equity roll-ups, one would fear that the goodness is getting harped away somehow. At least that would be my my fear if I was there. So, you're looking for something to differentiate it. So, then there's this kind of growing crop of like what does an IT or like a an AI rollup thing look like? But everybody's kind of talking about it in a very different way, right? which is so one of the things that we're trying to do is not exactly do that like we kind of rhyme with that in some ways. We rhyme with a with a rollup in some ways or we rhyme with a with a a tech company in some ways. We're trying to do is kind of take the best of breed of all of those mental models and do something a little bit different. So in our case for example one one easy example of several the relationship with Thrive Holdings gives me a lot longer time horizon, right? I can think about doing something that's really durable. Like if we're going to change, it's one thing to create disruption or take advantage of disruption. If we're going to really change a really entrenched business model like managed IT services, it's probably going to take a long time even if we're outrageously successful, right? So having that kind of time horizon to work with gives me a way to to address a different thing than any private equity or traditionally, you know, structured private equity role would have to.

Um, which deacto is a good thing, I think. And I think the private equity folks um that are paying attention probably see that also.

Well, makes sense.

Thank you so much for coming on the show. I want to head on for a hundred million.

Congratulations.

Very very cool. Great to meet you. Uh come back on if if there's something in the news that that you've got a strong opinion on. Come back on or I'm sure you'll be back on for more fundraising.

I'd love to talk to you soon. Have a good rest of your day.

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