Hand In Hand: VC-Funded Vendors And The Channel

At General Catalyst Partners, managing director Steve Herrod, formerly the chief technology officer at VMware, said hybrid cloud is foremost in his investment strategy. "All of my investments have a heavy focus on assuming a world where there are benefits to having stuff on-prem and benefits to off," ​said Herrod, whose investments have included data protection vendor Datto.

In this environment, VCs say they are encouraging their portfolio companies to invest a portion of their venture capital funding into becoming more channel-friendly.

That can mean offering generous margins and incentives to solution providers, hiring more channel managers, and boosting market development funds—as well as making their product easier for channel partners to integrate and sell. 

"Cloud is about speed and agility, so the product and service had better be very customer-friendly and channel-friendly," said Verhalen of Matrix Partners, who has backed emerging IT companies such as Panzura.

Venture-funded innovators such as Docker, Turbonomic and Puppet are among those investing heavily in making their channel programs top-notch.

This past fall, Docker, which has raised $160 million in funding to date, launched a two-tiered program for partners deploying its enterprise container platform. Docker now generates leads and initiates sales that are turned over to top-tier partners, provides sales and technical training and support, and offers discounts based on revenue attainment.

Ben Golub, Docker board member and former CEO, told CRN that nearly 60 percent of sales during the first quarter of the year went through the channel. "Our partner program is a key part of our strategy," Golub said.

Meanwhile, at Turbonomic, backed by $125 million in venture capital funding, the company is working to beef up its channel program following the recent addition of 22-year Microsoft sales veteran Jennifer Heard as channel chief. The company has about 250 partners and did about $40 million in revenue through the channel last year on more than 900 partner transactions.

Turbonomic's offering enables partners "to fulfill that trusted advisor role, and not have an agenda about whether something should run on-premise or off--but also not feel that they lose when it goes off-premise," said CEO Ben Nye. "It keeps both sides of the hybrid cloud world accountable to run efficiently and performantly."

Rene van den Bedem, chief architect and strategist at ​Cincinnati, Ohio-based systems integrator RoundTower Technologies, recently told CRN that Turbonomic has enthusiastically embraced the channel.