AppDirect Raises $80 Million for AppSmart Invest Program, Courts Partners

Subscription commerce provider AppDirect has announced $80 million in funding that will go to channel partners of its AppSmart division.

San Francisco-based AppDirect received the funding from Caisse de dépôt et placement du Québec (CDPQ), which handed AppDirect $185 million in 2020. The new $80 million will expand the AppSmart Invest partner funding program in addition to help establish an overarching funding arm named AppDirect Capital.

AppSmart earlier this year unveiled its Invest program, which provided technology adviser firms with upfront and recurring capital without taking any equity away from them. A total of $45 million went to 11 different partners, according to chief marketing officer Adam Christensen. Members include Global Communications Group, Netstar Communications and On Track Communications.

Christensen said AppSmart intends to expand its list of participating firms with the additional $80 million.

AppSmart’s Adam Christensen

“[The goal] is very much to bring in more Invest partners across a broader spectrum,” he told Channel Futures.

Christensen said CDPQ’s funding varies considerably from what it has done in the past with AppDirect. While the rest of AppDirect’s $400-plus million investments have gone to strengthen the company itself, he said the new $80 million functions as a “pool of money” for the channel.

“It’s not an equity thing; it doesn’t change in our evaluation. It’s not an investment in AppDirect; it’s a joint investment in the technology channel,” he said.

AppSmart Invest

Christensen said Invest members fall into three different buckets, though all sport a growing recurring revenue business. The first group will use the funds to double down on their existing business model. The second group spins up new business endeavors. The third group uses Invest as an opportunity for an exit, according to Christensen.

Program members make the AppSmart marketplace their lone platform for brokering technology. The exclusivity does not apply to their subagents or to solutions that AppSmart doesn’t offer. However, Christensen said the Invest program is helping to enlarge AppSmart’s ecosystem.

“The point of this is really kind of consolidating business and growth with AppSmart,” he said.

Christensen differentiated the program from the many agent rollups that are occurring in the space. Upstack, for example, has acquired more than 15 consultancies through the backing of private equity firm Berkshire Partners.

“We’re not like a PE trying to roll up a bunch of channel partners. This is really about getting that money to invest in their growth,” Christensen said.

Partner Perspectives

Mark Venuto is chief revenue officer for Ohio-based US Network. The firm met with AppSmart in early 2020 to learn about the funding program.

“We were very intrigued after our first meeting, and we continued our conversations — as I am truly glad we did. US Network was one of the very first AppSmart Invest partners,” Venuto told Channel Futures. “This truly allowed us to change the way we were doing business and expand with a very rapid growth pace. AppSmart is an amazing company with a brilliant executive leadership team that will truly change the overall view and landscape of the entire indirect/MSP channel.”

Venuto has shared that US Network’s partnership with AppSmart led to it going back into its existing customer base to …