When I started my MSP in Perth back in 2005, my competition was literally in the suburbs next door. We knew who they were. We’d see them at the same vendor events, lose a client to them, win a different one back six months later, and sometimes trade staff without anyone taking it too personally.
Then we’d sit together at the next industry lunch and complain about recruiter fees, mining salaries, and why good engineers were suddenly impossible to find.
Looking back, that feels like a different industry.
After exiting in 2025 and joining Evergreen, I thought I understood what consolidation looked like. I had lived through enough of it. I had seen the PE-backed groups, the larger strategic buyers, the local rollups, the regional champions, the vendor shifts, and the waves of owners wondering whether now was the time to do something.
So I thought I could read the room.
I was wrong.
The more I have had the chance to zoom out, the more obvious my blind spot has become.
The thing that changed my view was the pattern I started seeing. AI-native capital was not just funding tools for MSPs. It was starting to enter managed services as both operator and acquirer.
These are not MSPs adding automation after the fact. They are not service desks buying another tool and saying they are AI-enabled.
They are acquisition platforms where AI is part of the operating model from day one.
That is a very different thing.
I used to say born-in-the-cloud MSPs were built differently, and they were. The way they approached an Exchange to Office 365 migration made our older on-prem project delivery model look like we were still delivering IT on horseback.
But this shift feels bigger than that.
This is not the old consolidation playbook with a fresh coat of paint. It is something else.
Traditional private equity buys, improves, professionalises, grows, and eventually exits on a fund timeline. Margin expansion, operational improvement, better reporting, stronger leadership, a better multiple at sale.
In the ANZ MSP market we already have versions of this: eFex with Advent Partners, VITG with Riverside, Nexon with Adamantem.
I understand that model. I have had plenty of those conversations and sat around the table in peer group meetings with owners going through the process and then sharing the gory details after the fact.
What is emerging now feels different.
Omdia’s Jessica C Davis called it “a new category of rollups” backed by AI-minded venture investors, rather than traditional PE. Rich Freeman at Channelholic put it even more directly when he said what Shield and Titan are building is “unlike anything the managed services space has seen before.”
The better way to understand them is that they are AI software companies that buy MSPs, not MSP rollups that use AI.
That is the point MSP owners should not skim past.
The Shield example in particular is worth pausing on, not because of the names involved, but because of what it signals. When AI research, engineering talent and acquisition capital start meeting inside an operating company, that is no longer normal MSP consolidation. That is a different category being built in real time.
If that is right, the ambition is not simply to build a better MSP by 2030. The ambition is to become the default path through which SMBs adopt AI.
Not as a short-term land grab. As a structural position in the segment.
Just before Treeline closed its a16z round, Sequoia published a piece that genuinely surprised me. Not because of what it said, but because of who said it.
A firm of that scale had zeroed in on managed services.
Julien Bek’s “Services: The New Software” named IT managed services as a prime target.
His argument was pretty direct. Every SMB outsources IT. Patching, monitoring, user provisioning, alert triage. Repetitive intelligence work, happening across thousands of similar environments.
You might have expected Thoma Bravo, owner of ConnectWise, or Insight Partners, owner of Kaseya and Datto, to frame the MSP market that way.
It was Sequoia.
That was the moment this stopped feeling like an MSP tools issue and started looking like part of a much bigger software and services shift.
The ratio behind the capital is one Microsoft partners have understood for years. Don’t get too hung up on the licence margin. The real money is in the recurring labour wrapped around the software.
Sequoia put a number on it: for every dollar spent on software, six are spent on services.
That 6:1 gap helps explain why roughly $300 million of disclosed capital has gone into AI-native MSP and IT-services platforms since June 2025, in a market that historically attracted far more PE attention than venture-backed AI platform capital.
This is where the market data gets uncomfortable. Client demand for AI is running ahead of what most MSPs are actually monetising. That gap is not just a product problem. It is a positioning problem. And it is exactly the kind of opening well-capitalised platforms are designed to exploit.
The same logic is showing up in adjacent bets too. Sequoia also led Serval’s $75M Series B at a $1B valuation. Serval is automating IT workflows directly for companies. Instead of buying MSPs to transform delivery, this model gives companies AI-native tools that may bypass parts of the MSP model altogether.
Whether that works is a whole separate post.
But what stood out to me is that General Catalyst is also backing Serval. In other words, investors are not only backing AI-native MSP platforms. They are also backing tools that could pull work away from MSPs.
It feels like an each-way bet at the Melbourne Cup, with capital backing the rollup model and the model that might bypass parts of it.
The numbers are interesting, but the fact they are publishing them is probably the bigger tell. Traditional MSP rollups do not usually talk like that. It shows they are trying to earn trust in a different way, more like a software company proving product leverage than a services business talking about customer satisfaction.
Now, to be clear, the platforms are US-based and the capital is US-based. None of this is going to show up in your pipeline tomorrow morning. I am not trying to be Chicken Little with a megaphone.
But the ripples usually get here eventually.
For ANZ MSP owners, I do not think the immediate risk is that Shield, Titan or Treeline open an office in Sydney next month.
The bigger risk is that the definition of a valuable MSP changes before local owners have adjusted their own model.
If buyers, clients and investors start valuing proprietary workflow, client intimacy, data advantage and AI-enabled delivery leverage, then service quality alone will not carry the same premium it once did.
That is an issue, because service quality has been the backbone of a lot of very good MSPs.
But great service, cyber capability, and vendor badges are now table stakes. They are not enough on their own to be a lasting point of difference.
The MSPs that matter in five years will not be the ones who got good at selling Copilot first. It will also not be the ones who automated a few service desk tickets and declared themselves AI-ready.
It will be the ones whose clients cannot imagine replacing them because the relationship is impactful, too valuable and runs too deep.
And I want to be careful with the word “impactful”, because it gets used so much now that it can mean almost anything.
Tickets automated and Essential 8 Level 2 achieved are not impact. That is like saying you run a great restaurant because the salt and pepper shakers work, nobody gets food poisoning, and tap-and-go is available.
That is just the operating standard. Nobody drives across town for that.
Impact is measurable business outcome. Yes, it’s a complete corporate bingo statement I know. But it is also exactly what nearly every CEO is reading in airline lounges and talking about in boardrooms
So, I do not think the real question is whether an MSP can sell more AI tools.
It is whether your clients see you as the firm that runs their infrastructure, or the firm that helps shape how their business operates.
You cannot have that second conversation with a client who still thinks of you as the people who fix their printers and reset passwords.
That gap, between where many MSPs sit and where they probably need to be, is the opening that competitors from accounting, digital, web and management consulting are already walking through.
I delivered a version of this message to a room of IT industry executives at the techpartner.news Pipeline 2026 event. Mark Iles from Omdia had just finished a deep dive on M&A trends across the region and was already signalling the same shift.
To be fair to most owners in that room, the macro view is hard to see from inside an MSP.
When you are running the business, your brain is wired for the urgent. Staff issue. Client escalation. Project margin. Cash flow. Vendor change. Security incident. Sales pipeline. Someone wants a quote yesterday.
The day-to-day drowns everything else out.
I lived that for 21 years. I get it.
But the firms rebuilding this category are not waiting for local operators to catch up. They are already several moves ahead, and they are playing on a different field from the start.
James Davis and I have spoken before about the value of sharing things people do not want to hear. I think this might be one of them.
The first question is whether MSP owners have noticed. I am trying to do my bit there.
The second, and more important question, is what owners do about it before the game is played on someone else’s terms.
The benchmarking data already shows the gap between the top and the bottom of the MSP market is real, and it is widening.
The encouraging thing is that leaders, teams and businesses can change. Every major technology shift in this industry has proven that.
The window is still open.
Just don’t confuse service desk automation with strategic relevance.