A large California backer has made an alarming investment in Pennsylvania. Norwest Venture Partners, a $3.7 billion investment firm in Palo Alto, is now majority owner of Alarm Capital Alliance (ACA), providing resources that “will help us pursue multiple strategic growth initiatives,” says ACA's CEO Amy Kothari.
Based in Media, ACA is a fast-growing, nationwide security alarm company. The industry measures revenue as “RMR” or recurring monthly revenue. In 2002, when Kothari joined ACA as chief financial officer, RMR was just over $302,000; today it has grown to $3.7 million.
ACA has an unusual business model, Kothari explains: “The contract you have with your home alarm company is a commodity. Those contracts are bought, sold and traded all the time.” ACA acquires accounts held by small, independent alarm companies. Most of these small companies become, in essence, subcontractors, although in some cases, ACA acquires the smaller company outright. Altogether, ACA has more than 160 companies in its portfolio.
Now, with its new (though undisclosed) capital, ACA is pursuing several growth strategies, including a move into direct-to-consumer alarm services, first in Seattle and now expanding into the Philadelphia tri-state region. ACA also sees opportunity in “smart home” technology, allowing for remote control of alarm systems, lights, thermostats, security cameras and more. Most of ACA's 115,000 existing customers have straight burglar and fire alarms so smart home technology has huge potential, Kothari says.
ACA currently employs about 125; Kothari expects to hire 12 to 15 new employees a year and to triple the size of the business in five years.
Source: Amy Kothari, Alarm Capital Alliance
Writer: Elise Vider