Cloud Equity Group
Cloud Equity Group is a private equity and mezzanine debt firm that acquires and consolidates lower-middle market companies in web hosting, cloud infrastructure, and managed IT services, operating from New York with portfolio platforms including Brightworks IT.
- Company typePrivate
- Founded2013
- HeadquartersNew York, United States
- Headcount1–10
- GTM typeB2B
- OfferingServices
What Cloud Equity Group does
Cloud Equity Group is a New York-based private equity and mezzanine debt firm founded in 2013 by Sean Frank, CFA, that invests exclusively in lower-middle market companies in the web hosting, cloud infrastructure, and tech-enabled business services sectors. The firm operates from 14 Wall Street with a four-person investment team and has completed more than 40 acquisitions since inception, including carve-outs (e.g., Windows-based shared and reseller hosting clients from A2 Hosting in October 2020), single multi-asset transactions (11 hosting companies within the Conseev portfolio in August 2020), and bolt-on deals executed through portfolio platforms.
The firm offers two primary investment vehicles: equity participation through Special Opportunities Funds on a Limited Partner basis (4–6 year terms targeting tech-enabled business service providers) and senior/mezzanine debt through Specialty Lending Companies I and II, which provide cash and PIK interest with warrant participation. Its portfolio is structured around two platform companies — Brightworks IT (managed IT services, $10M+ revenue run rate, 80+ technology professionals, six MSP add-ons) and, until its October 2022 exit, VPS Network Group (international VPS and bare-metal cloud, where ARR grew more than 200% during CEG's 7-year hold). CEG's revenue model is fundamentally that of an asset manager: management fees on committed capital, debt-investment interest income, and episodic carried interest tied to exits such as the 2022 sales of CloudAccess (to Miss Group), ComfortHost (to KnownHost), and VPS Network Group (to Homepage Universe Inc.).
The firm sources deals through a network of investment bankers and intermediaries, targets established targets with more than $1 million in revenue and strong unlevered free cash flow, and pursues value creation via operational improvement and add-on acquisitions within retained brand portfolio companies (Virpus, MochaHost, Digital-VM, Data Network Services, and others). Limited Partners are HNW individuals and institutional investors approached through direct investor relations rather than retail distribution channels.
Cloud Equity Group firmographics
Firmographics- Name
- Cloud Equity Group
- Legal name
- Cloud Equity Group, LLC
- Website
- https://cloudequitygroup.com
- Company type
- Private
- Founded year
- 2013
- Operating status
- Operating
- Headcount range
- 1–10 employees
- Short description
- Cloud Equity Group is a private equity and mezzanine debt firm that acquires and consolidates lower-middle market companies in web hosting, cloud infrastructure, and managed IT services, operating from New York with portfolio platforms including Brightworks IT.
- Ownership category
- akta.pro rank
Cloud Equity Group industry classification
Industry- Product category
- Private Equity & Investment Management
- NAICS
- Portfolio Management and Investment Advice (523940), Other Investment Pools and Funds (5259), Funds, Trusts, and Other Financial Vehicles (525)
- SIC
- Investment Advice (6282), Security Brokers, Dealers & Flotation Companies (6211)
- akta.pro primary industry
- Technology & Software Growth Equity (FSANACAA)
- akta.pro secondary industries
- Telecom, Networking & Infrastructure Growth Equity (FSANACAJ), Private Equity Fundraising Placement (FSAEALAB), Industry/Vertical Cloud Platforms (e.g., Gov/Healthcare/Financial Cloud Regions) (HDABAAAL), Cloud Managed Services (Operations, Monitoring, Patching) (BPAEACAF)
Keywords
Where Cloud Equity Group is headquartered
LocationHeadquarters
- HQ city
- New York
- HQ country
- United States
- HQ region
- North America
Offices1 record
Markets served
Cloud Equity Group business model
Business model- GTM type
- B2B
- Offering type
- Services
- Cost components
- Personnel, Operations, Marketing or Sales, Technology or R&D, Others
Revenue model
- Private Equity Returns: Returns generated through equity ownership in portfolio companies. The firm acquires companies, improves operations, and exits through sales or IPOs. The firm has completed over 40 acquisitions since 2013 across the hosting and cloud infrastructure sectors.
- Debt Investment Returns: Senior and mezzanine debt investments provide returns via cash and payable in kind interest. Investors receive above-market interest rates and participate in company growth via exercisable warrants.
- Portfolio Company Performance: Portfolio companies generate revenue through hosting, managed IT services, and technology-enabled business services provided to end customers.
Go-to-market motion1 record
Distribution channels2 records
Marketing channels6 records
Cloud Equity Group product offering
Product offeringCore offering
Cloud Equity Group is a private equity and mezzanine debt firm that acquires, operates, and exits lower-middle market companies in the web hosting and cloud-based infrastructure sectors. The firm offers two primary investment vehicles: equity investments on a Limited Partner basis (4-6 year terms) and senior/mezzanine debt investments with warrant participation. The firm has completed over 40 acquisitions since 2013, deploying capital across web hosting providers, managed IT service companies, and digital agencies while consolidating them into platforms such as Brightworks IT.
Product overview
Cloud Equity Group is a private equity and mezzanine debt firm (founded in 2013) offering two primary investment vehicles: (1) Growth - private equity investments allowing investors to own portfolio companies on a Limited Partner basis for 4-6 year terms targeting tech-enabled business service providers; and (2) Income - senior and mezzanine debt investments offering attractive returns via cash and PIK interest with warrant participation. The firm also launched Specialty Lending Company II for debt financing. The portfolio includes platform companies like Brightworks IT (managed IT services with 80+ professionals), Data Network Services (IT consulting since 1987), and numerous acquired hosting brands (Virpus, CloudAccess, ComfortHost, MochaHost, NodeServ, Fresh Roasted Hosting, InnoHosting, CoolHandle, Chrein, Digital-VM, eBizUniverse, and others) across VPS, SSD, cPanel, WordPress/Joomla hosting, as well as SEO and digital agency services. The firm operates from its Special Opportunities Fund I and latest Special Opportunities Fund for equity investments.
Differentiator
Problem solved
Functional benefit
Products and services
- Special Opportunities Fund I Cloud Equity Group's flagship private equity fund that invests in lower-middle market web hosting, cloud infrastructure, and tech-enabled business service companies, providing capital and operational resources for growth with 4-6 year Limited Partner terms.
- Special Opportunities Fund Cloud Equity Group's latest Special Opportunities Fund used to complete leveraged buyouts of tech-enabled business service providers and lower-middle market hosting and cloud infrastructure companies.
- Specialty Lending Company II Debt financing vehicle launched in 2021 to provide senior and mezzanine debt to tech-enabled business service providers, offering above-market interest rates and warrant participation in growth.
- Senior Debt Investments Senior debt investments in lower-middle market technology companies offering highly attractive returns via cash and payable-in-kind interest, available to investors through Cloud Equity Group's specialty lending companies.
- Mezzanine Debt Investments Junior (mezzanine) debt investments in lower-middle market technology companies offering significantly higher than market interest rates and exercisable warrant participation in company growth, available to investors through Cloud Equity Group's specialty lending companies.
Quantifiable outcome
- VPS Network Group grew annual recurring revenue by more than 200% during the 7-year investment period (2015-2022)
Companies that use Cloud Equity Group
Customer profileSegments3 records
Ideal customer profiles2 records
Cloud Equity Group technology and API
TechnologyTechnology focussed No
API detail
- Has API
- No
- API docs
- API detail
Core technology
AI maturity
App detail
Cloud Equity Group partnerships and signals
Strategic signalScale indicators6 records
Recent moves8 records
Expansion highlights5 records
Cloud Equity Group competitors and assessment
Company assessmentDirect peers
- Webster Equity Partners: Lower-middle market PE firm focused on tech-enabled services and healthcare services with a build-and-buy platform approach, similar in size and strategy to Cloud Equity Group.
- Boathouse Capital: Lower-middle market PE firm providing both equity and mezzanine debt to founder-led tech-enabled business services companies, closely matching Cloud Equity Group's dual equity/debt vehicle structure.
- NewSpring Capital: Lower-middle market PE firm actively investing in technology-enabled services with a focus on building platform companies via add-on acquisitions, directly comparable to Cloud Equity Group's roll-up model.
- Mainsail Partners: Growth equity firm investing in bootstrapped, profitable lower-middle market tech-enabled business services companies, a similar end-market profile to Cloud Equity Group's targets.
- Garnett Station Partners: Lower-middle market PE firm focused on tech-enabled services and business services consolidations, mirroring Cloud Equity Group's buy-and-build platform strategy in fragmented services markets.
- Eastward Capital Partners: PE firm with a sector focus overlapping Cloud Equity Group's hosting and cloud infrastructure niche; Eastward Capital Partners is also already an investor in Cloud Equity Group, confirming direct thematic alignment.
Broad incumbents
- Wynnchurch Capital: Middle-market PE firm with operations in tech-enabled and business services; broader in scope and check size but pursues comparable lower-middle market services platforms.
- Alpine Investors: PE firm focused on lower-middle market services and software businesses with operating-partner support; broader and more institutional than Cloud Equity Group but operates in similar end-markets.
- Stone Point Capital: PE firm investing in financial services and tech-enabled business services; much larger AUM but pursues adjacent services consolidation themes similar to Cloud Equity Group.
- Tengram Capital Partners: PE firm investing in consumer and tech-enabled services companies with a sector-specialist model, overlapping with Cloud Equity Group's vertical specialization approach.
Market position
Strengths5 records
Weaknesses5 records
Competitive moat4 records
Key risks6 records
Key highlights6 records
Customer concentration
Cloud Equity Group social profiles
Digital presenceCloud Equity Group financial estimates
Financial estimateRevenue estimate
Valuation estimate
Cloud Equity Group leadership team
Management profileNumber of profiles
Profiles4 records
Cloud Equity Group subsidiaries and ownership
Company hierarchySubsidiaries18 records
Cloud Equity Group funding detail
Funding detailFunding overview
Funding rounds1 record
Investors1 record
Funding detail is available on the Subscription and Enterprise plan.Contact sales →
Cloud Equity Group M&A and investment
M&A and investmentM&A8 records
Investments
M&A and investment is available on the Subscription and Enterprise plan.Contact sales →
Frequently asked questions about Cloud Equity Group
What does Cloud Equity Group do?
Cloud Equity Group is a private equity and mezzanine debt firm that acquires, operates, and exits lower-middle market companies in the web hosting and cloud-based infrastructure sectors. The firm offers two primary investment vehicles: equity investments on a Limited Partner basis (4-6 year terms) and senior/mezzanine debt investments with warrant participation. The firm has completed over 40 acquisitions since 2013, deploying capital across web hosting providers, managed IT service companies, and digital agencies while consolidating them into platforms such as Brightworks IT.
Is Cloud Equity Group a public or private company?
Cloud Equity Group is a private company. It is classified as founder individual operated bootstrapped and is currently operating.
When was Cloud Equity Group founded?
Cloud Equity Group was founded in 2013. It employs 1 to 10 people.
Where is Cloud Equity Group based?
Cloud Equity Group is headquartered in New York, United States, in the North America region.
How does Cloud Equity Group make money?
Three revenue lines are on record. Private Equity Returns are the primary driver. The others are debt Investment Returns and portfolio Company Performance.
Who are Cloud Equity Group's main competitors?
Direct peers on record are Webster Equity Partners, Boathouse Capital, NewSpring Capital, Mainsail Partners, Garnett Station Partners and Eastward Capital Partners. Broad incumbents are Wynnchurch Capital, Alpine Investors, Stone Point Capital and Tengram Capital Partners.
Does Cloud Equity Group have an API?
No public API is recorded for Cloud Equity Group.
What industry is Cloud Equity Group in?
Cloud Equity Group's product category is Private Equity & Investment Management. Its primary akta.pro industry code is FSANACAA, Technology & Software Growth Equity, with a secondary code of FSANACAJ, Telecom, Networking & Infrastructure Growth Equity. Its NAICS code is 523940 and its SIC code is 6282.