Agiliti Completes Final Financing Round, Emerges as Survivor in IT Infrastructure Business

HostReview.com
Friday, December 13, 2002; 12:00 AM

ST. PAUL, Minn., Dec 13, 2002 /PRNewswire via COMTEX/ -- Agiliti Inc., a managed IT services and outsourcing provider, today announced it has closed an additional $2 million in financing. This round of financing, the last outside funding the company will require, comes as it is reaching profitability and will allow it to add important new services and expand its staff. Many of the company's previous investors participated in this round, including Delphi Ventures of Menlo Park, Calif., and Affinity Capital Management of Minneapolis.

"We're blessed with being a survivor in what has been an extremely difficult period for the IT industry," said Tom Kieffer, Agiliti founder and CEO. "It's been a tough four years, but through it all we continued to believe in the new model of hosted IT we were founded upon. The premise was right back then -- the timing just turned out to be early. We hung in there, built a strong base of 200+ customers, continued to refine and expand the offering, and delivered real cost-saving benefits. Now we're uniquely positioned to benefit as the market embraces this model."

During the technology bubble of the late '90s, companies overspent in information technology and have since been largely trying to ingest and make use of all they have. Analysts note, too, that the IT industry itself has been at fault in the past for making computing too complex. "Our model has always been about simplifying IT for customers," said Kieffer. "And, today, helping companies do more with less is an absolute mandate. It's a key part of our approach."

Agiliti's offerings include outsourced data center services ranging from co-location to fully managed hosting; monitoring and network management, to improve reliability and control of remote or hosted systems; and online software application delivery and management for independent software vendors (ISVs). The company is now also adding professional services to round out its offerings -- leveraging its IT infrastructure expertise to help enterprise customers deliver IT better for themselves and to transition to the new utility computing model. That new model, also called "on-demand computing," is gaining broad industry acceptance, with most of the major computing vendors having recently announced initiatives related to it. According to IDC, global IT outsourcing will grow from a $56 billion industry in 2000 to an estimated $100 billion in 2005, a compound annual growth rate exceeding 12%.

By formally announcing professional services as an extension of its managed IT offerings, Agiliti is entering a market segment that is also forecast to see above-average growth; specifically, these are consulting services that help companies get more performance from the IT systems they already have. According to Kennedy Information Inc., that segment of IT consulting is growing at an annual rate of 6-8% per year (compared to 3% for IT consulting overall), and will account for $6 billion in revenues in 2002.

"Customers need assurance that their IT service providers will be around for the long-run," said Andrew Schroepfer, president and founder of Tier 1 Research, a leading industry research firm. "Agiliti has been a pioneer for many of the services that are experiencing high growth in the industry, and this round of financing assures their continued leadership position."

Agiliti currently has 40 employees, all at its headquarters in St. Paul's Energy Park, and plans to grow by 50% in 2003, adding 20 more employees. Initially, it will continue to serve customers located primarily in the Upper Midwest. "We're very excited about our future and bullish about our continued growth as a leader in this business," said CEO Kieffer.

In commenting on the latest round of financing, Don Lothrop, managing partner of Delphi Ventures, said: "The Agiliti team has worked hard to survive. No question there's been a major reset of expectations in the IT marketplace, and in the investment community as well. We continue to be confident that Agiliti will not only be a successful player, but a significant one as this new form of IT takes hold."

About Agiliti

Agiliti helps enterprises of all sizes achieve a new level of IT performance through a modular suite of outsourced hosting and IT services. These flexible services help companies reduce costs and improve the reliability of their systems, networks, and applications. All Agiliti offerings are delivered with guaranteed service levels and 24x7 support from the company's tier-one data center in St. Paul, Minnesota. For more information about Agiliti, please visit the company's website at www.agiliti.com or call 1-866-AGILITI.