Vapour Cloud is a business that’s going places by staying put – specifically with its core offers of cloud voice, video, network connectivity and storage. Having been established just six years ago, it’s expecting to generate revenues of £8m through its uplifted partner portfolio alone within three years and is eyeing 50% growth over the next 12 months.

One of the things that’s notable about the business, as outlined in a Business Leader article, is that it’s already generating 85% of its revenue through its partners. That’s off the back of a business transformation drive led by its CEO Tim Mercer that kicked off early last year.

As the piece explains, Vapour Cloud was aiming to secure 10 partners within the year. In fact, it fell short, reaching only seven, but those seven “look set to generate £6m of total contract value revenue over the next three years.”

Fast forward to today and the business is beginning another drive to find partners, again aiming to recruit 10 new ones over the next 12 months. We couldn’t help but notice that some of the criteria they were looking for in their new partners was outlined in the Business Leader article, specifically:

• No geographical preferences
• A mixture of IT hardware VARs (value-added resellers)
• Have struggled to generate recurring revenue streams
• Avaya partners will always sit nicely in our portfolio

Given the platform at our disposal, we thought we’d run Vapour Cloud’s criteria through it and see what turned up for them.

The process

A quick recap: the IQBlade platform analyses hundreds of data sources each for over 5 million UK businesses. It then categorises the data and makes it searchable, meaning it can be used to search for businesses based on very specific criteria.

Our search function can look for channel businesses or end-user businesses and has numerous options in each of the following six areas:

• End-user sector / channel partner type - MSP, cloud integrator, SI, reseller etc.)
• Technology being used / technology the partner can integrate
• Capabilities
• Financials - Revenue, profitability, growth
• Location - Number of locations, distribution of locations,
• Key terms - Key terms on their website/social media

Each time a criterion is added to the search parameters in the IQBlade platform, the number of companies that meet them is narrowed down from the initial total of 5 million. For Vapour Cloud, we began by looking for only UK-based channel businesses with existing Avaya relationship / capability, giving an initial target list of 1,200 UK businesses.

We then looked at the primary business model of those channel partners selecting those whom appeared to have more focus on product resale than on annuitised-service.

The results

Our combination of search filters quickly whittled the results down to a focussed target list of 15 companies. This is a manageable number of high-quality prospects, based on the detailed parameters we applied, but that figure could, of course, be increased by broadening those parameters if more leads were needed.

The businesses range in size from small telecoms resellers to larger channel partners with thousands of customers. The target group’s average revenues for last year were just over £16m, while the strongest one- and three-year compound annual growth rates (CAGR) are 59% and 24.4%, respectively.

The opportunities

There are two members of the target group that caught our eye in particular: Chess ICT and Prodec Networks. Both are pulling in revenues of around £20m and appear to be selling more product than service and both appear to have competencies in Avaya. At first glance, this would make them a good fit for Vapour Cloud, based on the criteria we’ve pulled out of the Business Leader article.

Looking more closely at Chess ICT (what was Lanway pre-acquisition), we can see that it’s a technology reseller providing solutions to over 33,000 businesses in the UK, helping them grow through proven technology and expert advice. The business has a reasonable three-year CAGR of 10.4%, but this has slowed and reversed in the last year to -2.8%, closely matching Vapour Cloud’s sweet spot.

And crucially, for Vapour Cloud, the wider Chess group was voted top of the Sunday Times 100 Best Companies to Work list by its employees last year and has won both the ‘Institute of Customer Service - Quality Service Provider of the Year award’ and the ‘Customer First Award’ for the quality service we provide our customers. This gives confidence that we’re looking at a well-run business.

Prodec Networks too offers business IT solutions, but with a focus on collaboration and communication. It aims to combine “expertise of business networks with productivity and collaboration tools” to create “secure, stable and scalable IT environments that allow its customers to operate securely and effectively from any location.”

Performance-wise it looks to be witnessing the classic signs of channel partners trying to extend their growth curve, with turnover down 5.3% YoY to £12.5m, gross profit down 7.7% to £3.1m and operating profit down 79.8% to £83,000. Despite all that, it’s still posted a three-year CAGR of 4.2%, but it’s no doubt looking for opportunities to help return to growth in profit if not revenue.

The upshot

Pulling out lead criteria from an article is, of course, not ideal. Ordinarily, we’d be able to help a business identify a bespoke range of criteria to ensure the best possible business results. Nonetheless, this article shows the process we go through to identify potential leads, potential partners, or competitors. The next step is approaching the businesses, something we use our data and expertise to provide guidance on.