Startup: Blue.cloud, Tampa, IT services and cloud data firm
Founder: Kerem Koca
Year founded: 2021
Investors/investment: Hudson Hill Capital, a New York-based private equity firm, is the company’s primary backer and has injected a “high eight-figure number” into the Blue.cloud coffers, according to CFO Brian Alvarez. That’s led the firm's valuation to exceed $100 million.
Like Accenture, a giant in its industry, Blue.cloud is one of those companies that’s essential to powering large enterprise clients’ back-end operations — the networks, applications and other underlying digital infrastructure that allows a customer to do whatever it is they do, whether it’s insurance, fintech or life sciences, all of which are fast-growing sectors that rely on Big Data.
“For most people,” Founder Kerem Koca says, “what we do is not that exciting.” But it’s absolutely critical, which is why Accenture, for example, has more than 720,000 employees worldwide and revenue of more than $61 billion in 2022.
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Blue.cloud, however, has chosen to focus solely on companies that have, or are in the process of, migrating their data infrastructure to the cloud.
“Once your data and all your stuff is in the cloud, we're working there,” Alvarez says. “We are a cloud-only digital transformation services company. Digital transformation encompasses implementations, services and support associated with tools and software platforms and building things in the cloud to be able to look at your data, visualize data and do data analysis. For a lot of our work, at the core of it is data. We're an IT services company partnered with software companies.”
If that’s difficult to grasp, Alvarez offers the example of a company buying an upgrade of Salesforce, a widely used customer relationship management (CRM) platform, to manage its data and sales pipeline and perform other essential business functions.
“Somebody's got to implement it, somebody's got to support it, somebody's got to set up all the access controls, all the dashboards and everything,” he says. That somebody can be Blue.cloud.
The next frontier for Blue.cloud, Alvarez adds, is applying artificial intelligence to data in the cloud, which he says will allow clients to perform predictive analysis and thus make better projections about future performance of their goods and services.
Obstacles to market
Alvarez and Koca don’t see any imminent threats on the horizon — in fact, they’re certain enterprise clients’ investments in technology, particularly the cloud migration process, will continue to grow rapidly. However, a slowing economy could lead potential customers to be more selective, which means firms like Blue.cloud will have to work hard to demonstrate value.
“A year ago, money was no issue, but people will want to see if there’s another implementer who can do the same thing at a better price point, with a little more value,” Koca says. “But that becomes an advantage for us, because although we are an American company with a strong presence here, we have a global workforce, so we can provide more value and better usage optimization compared to some of our purely U.S.-based competitors. In these times, I think we can grab more market share.”
To make the most of that opportunity, though, Blue.cloud will have to significantly increase its workforce, which becomes the company’s primary challenge. It already has nearly 400 employees, but it needs to hire 300-350 more by the end of next year to keep up with its growth — Alvarez says Blue.cloud expects to close out 2022 with about $49 million in gross revenue but is projecting $70 million in 2023. A short-term project with just a small team typically brings in $80,000-$100,000, while a complex, multi-year engagement could generate millions in revenue.
“We’re not selling cups of coffee for $5,” he says. “We're selling highly skilled labor implementations, software partnerships and platforms.”