VC for MSPs? Why Venture Capitalists are Betting on AI to Transform the Managed IT Services Market
The MSP industry has long been a darling of traditional Private Equity, with nearly every PE fund either already operating an MSP roll-up platform or actively seeking to acquire one, but a new breed of financial sponsor wants in on the party: Venture Capital. And even the Wall Street Journal is taking notice. The WSJ recently reported that General Catalyst invested $74 million into Titan MSP, and Thrive Capital launched Shield Technology Partners with $100 million. These moves mark a turning point: a sector long dominated by private equity roll-ups is now drawing VC dollars, with the potential to reshape the managed service provider landscape.
The global MSP market is large and recession-resistant, as nearly every business needs IT support regardless of the economic climate, and it continues to grow impressively. Analysts estimate that the global managed IT services market has grown to over $300 billion in 2025 and is expected to expand at a CAGR of more than 10% over the next five years. But make no mistake: VCs are betting on AI, as both a source of margin expansion and a new revenue stream. Two leading VC firms, Thrive and GC, are essentially making the same bet simultaneously: that the future of AI isn’t just in flashy consumer apps or cutting-edge robotics, but in making the most mundane parts of business dramatically more efficient.
This thesis is not as new to VC as it may seem. Well before the generative-AI revolution, Point72 Ventures launched a fund focused on applying AI to services businesses and acquired Agio, a New York MSP focused on financial services, in a bid to disrupt IT support with predictive intelligence. But today’s strategies are more acquisition-heavy and enjoy the tailwinds of generative AI. And MSPs are just one of many industries targeted for AI-enabled roll-ups. The New York Times reports that Thrive Capital is raising roughly $1 billion for Thrive Holdings, a permanent-capital vehicle to buy and operate AI-enabled service businesses, including IT services, over the long term. In collaboration with ZBS Partners, who have had success in roll-ups across industries from veterinarians to HVAC, Thrive launched Shield Technology, acquiring four MSPs in mid-2025 with plans to embed AI capabilities across the platform. Investing out of its $1.5 billion “Creation Fund,” General Catalyst led a $74 million round for Titan and initiated the platform with the acquisition of RFA, a New York–based MSP serving financial firms. We expect Titan to accelerate its strategy, acquiring more MSPs in the coming year. And it’s rumored that other firms, including Andreessen Horowitz, are preparing to jump into the space, signaling that MSPs are no longer niche consolidation plays but a core focus of next-generation tech investing.
The flow of VC dollars into MSPs reflects both market dynamics and technological opportunity. With late-stage rounds for elite venture companies becoming more competitive and valuations still compressed compared to 2021, investors are seeking businesses that pair resilience with scale. MSPs fit that profile: recurring revenue, sticky client relationships, and roll-up potential that make them durable, cash-flowing platforms. With venture returns down but plenty of dry powder to deploy, some VCs are concluding that while pure innovation plays are harder to differentiate, there is a new path: innovation applied to established markets with clear pain points.
AI is catalyzing this shift in investing style. On the operational side, automation is changing the traditional labor model: according to optimists, AI agents can resolve 30–40% of tickets, detect server issues before they impact performance, and optimize cloud resources dynamically. This can lift margins from 10–15% to 25% or more, while enabling a single technician to handle three to five times the workload. Unlike other lower-margin, lower-growth service businesses such as lawn care or HVAC, MSPs are often led by technologists, many of whom are eager and equipped to apply AI to improve their operations.
On the growth side, AI can meaningfully expand the bucket of services MSPs offer. Forward-looking IT services companies are already selling AI licensing into existing customer bases and building predictive cybersecurity centers, generating strategic IT roadmaps, and helping customers leverage generative AI within their own organizations.
Already, we’re helping our customers deploy AI at Harbor IT, Worklyn’s IT-services platform, which blends traditional consolidation discipline with technology-first integration. By acquiring and unifying IT-services providers, standardizing technology stacks, unifying data pipelines, and organizing teams into specialized service-delivery structures, we’ve built a national platform with the scale and consistency needed to deploy AI effectively. This structure enables automation across monitoring, ticket resolution, and cybersecurity while maintaining personalized service. And because Worklyn differentiates itself from private equity with a long-term holding structure, we can invest the time and resources required to build the foundations and apply AI holistically across our business.
Today, MSPs optimize the operations of the SMB economy, and VCs are betting that as AI enhances their efficiency, they are uniquely positioned to become the “managed AI” providers of tomorrow, shepherding small and medium businesses into an AI-first world – a trajectory that Harbor IT is already validating.