General Atlantic backs Israel-based Atera as SMBs undergo IT transformation

The firm has injected $77m into Atera, joining K1 Investment Management as an investor and pushing the IT services company's valuation to $500m.

General Atlantic is betting on the explosive growth in demand for IT services stemming from small- and medium-sized businesses, leading an investment round in Atera that values the Israel-based business at $500 million, the firm told PE Hub.

“As a trend coming out of covid, we’ve seen that even a smaller business has more complex IT needs because it is utilizing more technology than ever before,” General Atlantic managing director Alex Crisses told PE Hub. “Therefore, they need managed service providers (MSPs) and tools associated with maintaining that infrastructure. Hence, they need Atera.”

GA led Atera’s Series B funding round with a $77 million check alongside K1 Investment Management, the company’s first institutional investor. K1 invested $21 million in Atera in February.

Atera, based in Tel Aviv, is a remote-first IT management company that provides small- and medium-sized businesses with services relating to performance monitoring, help desk, reporting and operations management – all on a single platform.

Over the past year, the company secured 7,000 clients globally across 90 countries. Atera’s rapid growth, largely as a bootstrap company, underscores the emerging trend where small- and medium-sized businesses need better IT infrastructure and technology, Crisses said.

According to the firm, the technology stack has become “foundational” to small- and medium-sized businesses in a way it wasn’t 12 to 24 months ago. The covid-19 pandemic has pulled software innovation and IT trends forward by five years, creating tailwinds for Atera and GA’s other portfolio companies.

“All of our companies are trying to make themselves more efficient through software, and Atera is really playing to the center of that,” Crisses said. “That theme of software driving innovation and efficiency and functionality within every organization is something that’s proliferated at a pace that we’ve never seen before.”

The rise of cyber and ransomware attacks has also played a role in the increased demand for IT solutions across companies of all sizes, Gary Reiner, operating partner at General Atlantic, told PE Hub. While Atera is not a cybersecurity company, it can spot a cyber issue through its tracking technology that monitors the performance of all connected devices, Reiner explained.

“Atera is particularly good at seeing remotely for small- and medium-sized businesses whether any devices are underperforming because of those kinds of attacks,” Reiner said.

“When something gets taken over breach, you can see it in their performance,” he added.

GA sees a host of growth opportunities available for Atera, which it plans to support in terms of geographic expansion, as well by enhancing its go-to-market strategy, digital marketing, and pricing strategies. There’s also potential to add new technological capabilities, including on the cybersecurity front, Reiner said.

“There are many cybersecurity related solutions, some of which are in our portfolio, that we can easily imagine linking to Atera,” Reiner said.

“The number of products and solutions that can be added is a very compelling fit,” he said.

Geographically speaking, Atera marks GA’s fifth investment in Israel.

The firm’s first investment in an Israel-based company was Riskified, an eCommerce risk management platform. This month, Riskified filed for an initial public offering targeting a valuation in excess of $3 billion. The firm plans to list shares on the New York Stock Exchange under the ticker symbol RSKD, according to a recent SEC filing.

GA’s other investments in Israeli companies include: cloud platform provider Zoomin Software, identity security company Transmit Security and mobile marketing attribution software provider AppsFlyer.

Crisses also noted the firm’s “great partnership” with the Israel market, where it looks to take best-in-class technology and augment a given asset’s ability to grow globally.

“One of the big things we’re focused on, in terms of what we want to do, is add functionality and features for the customers,” he said.

While GA does not have a local office in Israel, Crisses says the connectivity between Israel and the US, and particularly New York, is great. In fact, the firm met Atera’s founder and chief executive Gil Pekelman in New York.