TERCERA

MANIFESTO

At Tercera we have a pretty simple mission:

To empower the people and businesses that make technology work. “People” being the crucial word here.

Everyday we hear how technology is reshaping the world in profound ways — from Generative AI and blockchain to 3D printed hearts.

We pour trillions of dollars every year into advancing products and technology, but we forget technology is of little value without the people who invent, design, develop, deploy, integrate, test, use, secure, manage and advance it.

So why is it that people-centric technology services firms (the integrators, consultancies, and managed service providers) have received such little attention from the investment community over the last decades?

It’s shocking to us that investors who pride themselves on identifying the next big thing overlook the fact that technology rarely makes it big without talented people who have the special skills to put it to real use. Yes, even with AI.

We created Tercera in 2021 to focus entirely on IT services businesses. More specifically, next generation services firms that specialize in high growth software ecosystems and market segments.

Services Need Love Too

The IT services market is not small.

According to Gartner, IT services has become the largest segment of IT spending at $1.5 trillion dollars in annual spend. Accenture, NTT Data, TCS and Capgemini alone rake in $150 billion dollars a year, and there are thousands of well-run, profitable, boutique services companies that are looking for growth capital to achieve their vision.

Here are just a few reasons why we believe services companies deserve a closer look:

Tech-enabled services firms are undervalued relative to software companies, partly because competition for capital is less fierce.

Services firm have an easier path to profitability, and don’t require years of product development before bringing in revenue.

Many services firms have far more predictable, stable and sticky revenue than investors expect.

Services BUSINESSES ARE DIFFERENT

There are, of course, fundamental differences between services and product companies.

For one, leadership, company culture, and having the right things in place to recruit, develop and manage talent is a much bigger priority in services companies where people are the key asset.

Then there are differences in how you plan and forecast, how you organize and enable sales, how you go-to-market and what elements of marketing you prioritize (hint: thought leadership matters a lot!), and the importance of channels and alliances in how you scale.

All of these areas look different in a people-centric organization compared to a product-centric organization, and they are constantly evolving. Especially as outcome-based pricing, pre-packaged IP, and industry capabilities gain steam in the age of AI.

The problem is that most VCs and PE firms have a playbook, and that playbook is optimized for product

Services firms are simply different, and once you appreciate those differences, you can hone investments, priorities and processes accordingly.

WHAT MAKES TERCERA SPECIAL

The Tercera team has learned a great deal about what works and what doesn’t over the last 30 years based on real-world experience. We are all veterans of the services industry who have developed the pattern recognition it takes to know when it’s time to grow or time to slow, when to double down in a market and when to expand, and most importantly, what elements must be in place to scale a successful, sustainable business.

We’ve learned from our successes, but also from our mistakes. We believe it’s this insight, along with the industry connections we’ve built over the years, that can help the next generation of service businesses quickly grab market share, and build highly scalable businesses that go on to do great things.

We realize that there are thousands of investment firms out there, with more popping up every single day. Our goal is to make sure we aren’t like everyone else. That we offer something different, and do things differently than your standard investment firm.

We don’t fit easily into a category. We’re a growth equity firm that sits somewhere between venture and private equity, where we look to both build something new and make something more profitable and operationally sound. As former operators and entrepreneurs, we look at opportunities through those two mindsets — not just what looks good on a spreadsheet.

We realize that great founders with a great business can get capital from any number of sources. So while we are primarily an investment firm, we believe our real value is our services-centric counsel and connections we can provide, not only from our own experience but through our highly curated Advisor community as well.

We also strive to have a different vibe than your traditional investment firm. We want to be the kind of team who you want to work with during the exciting times, but also the people who you aren’t afraid to call when things go wrong.

We are operator-centric investors who know what it takes to navigate the plateaus of growth, and create a valuable and enduring organization.

Building a business isn’t easy, but having the right partner alongside you makes it infinitely easier. If you’re looking for that right partner, contact us here.