Changing the Narrative: VAR Technology Finance Makes Its Name Known
by Phil Neuffer March/April 2016
After nearly three decades in business, VAR Technology Finance has seen some major changes and gone through some of its own. Luckily, that has gone hand-in-hand with strong growth. CEO Gary Sutton discusses the company’s rebranding, success in 2015 and the next big frontier.
A year ago at this time, VAR Technology Finance did not exist, and not just in the Monitor Top Private Independent rankings. However, that doesn’t mean it’s a new company — far from it. VAR has been around for nearly 30 years, launched in 1988 by CEO Gary Sutton. It wasn’t until last fall that the company took on the moniker of VAR Technology Finance, shifting from its original name, VAR Resources. The reasoning behind the change was simple. Sutton and the rest of the team at VAR wanted a name that better articulated what the company does and what it can provide.
“VAR has focused exclusively on the technology market for more than 25 years, which is something few other companies can say,” said Sutton when the announcement was made in October. “As we continued to grow and expand our services, we realized it was time to design a brand that better reflects our expertise and extensive knowledge of the market.”
Even if it is still too early to tell if the name change has had any major effect, Sutton believes it has helped elevate the company’s visibility to the manufacturers, distributors and resellers in the technology channel with whom VAR hopes to expand its relationships.
“It’s a new brand, and it’s created some excitement. I feel like the name really is more indicative of what we do and how we operate. We’re in the technology finance business, so I think it was more appropriate to use a name that better defined what we do,” says Sutton. “I think it more clearly identifies us to manufacturers, distributors and resellers in the technology channel as a company that can understand their business and partner with them.”
2015 was about a lot more than changing the header on the company’s website, however. Thanks to 15.4% growth in new business volume, VAR made its way into the Monitor Top Private Independents rankings, rising to No. 20 after being unranked a year earlier. In total, VAR registered funded new business volume of $115.6 million in 2015, up from $100.2 million in 2014. The amount of growth may sound excellent on paper, but Sutton still feels like there is room for improvement, noting that the percentage growth VAR experienced in 2015 was actually below its growth rate in 2014 and 2013, largely due to a slow start. However, a strong finish has him bullish about 2016 and beyond.
“2015 was a year where we were really landing some very good programs where we could build a platform to grow in the future,” says Sutton. “It was a year where we really landed some big relationships, but those didn’t really kick off until toward the end of the year and going into 2016.” In addition to the rise in new business volume, VAR enjoyed a substantial increase in average deal size, boosting from $46,800 in 2014 to nearly $60,000 in 2015. Sutton credits this increase to partnerships with larger name brand vendors that generate more sizable transactions.
“We’ve partnered more and more with manufacturers, and they’re bringing us into larger opportunities. We’ve progressively become more competitive on our rates and more aggressive on our residual positions,” Sutton says.
Although he cannot share many details, Sutton is quick to note that the company added a number of new vendor and private label programs at the end of 2015 and into the early months of 2016. He believes that VAR has positioned itself to be an attractive partner for distributors, resellers and manufacturers right now and in the future.
“We’re able to help them in the channel because of our processes, the people we have on site at the various resellers and our systems,” says Sutton. “We’ve been able to help some of these manufacturers grow their overall sales because of the equipment finance/lease penetration rate that we can improve for them because of our relationship with these large resellers and distributors. The manufacturers are more interested, and we’re actually talking to or having more discussions about that.”
Obviously, the industry and the world in general look much different than when VAR started in 1988. Sutton believes the company has far exceeded its initial objectives, noting that it’s pretty difficult to have a 28-year goal.
“We have new goals that are much larger, and we are excited about the future,” says Sutton. “We feel like there’s a lot of opportunity for us because we’ve focused on this industry for so long, and we’ve developed the expertise, the technology and, frankly, the relationships. You have to have enough relationships to create a synergy, and that’s what we’ve done over time.”
In terms of specifics, Sutton has seen growth in the breadth of companies VAR works with, as well as an increase in the number of companies that need a financing partner like VAR.
“We started out working primarily with VARs and resellers and we’ve moved up to larger resellers, distributors, software companies and manufacturers. We’re really covering the entire channel from manufacturer, distributor, software publisher, large and medium resellers, whereas in the beginning we were mainly working with medium-size resellers or smaller resellers and we’ve just moved up the channel over the years,” says Sutton of VAR’s evolution. “We’ve developed better technology to assist our partners and to help them increase their sales. We’ve gotten more penetration because we’re tied into so many different channel partners. Manufacturers are now very interested in working with us because we can help [them] increase sales through finance and lease penetration.”
Accomplishing goals is made much easier when you’re working with a team that you trust and believe in. Sutton is lucky enough to have such a team.
“We provide world-class service, and that’s mainly because we’ve been very selective in the people that we hire. We have very strong people working here who makes these things happen,” says Sutton, who also counts having creditworthy customers as a crucial ingredient of success. “I think that’s one of the keys — having the right people employed and having a good team.”
The talent that Sutton has surrounded himself with includes Vice President and Chief Risk Officer Daniel Dunn, who was formerly an executive for Wells Fargo Nationwide Equipment Leasing, and David Rieck, who has more than 30 years of financial experience and currently serves as chief financial officer. The roster may get even more robust as Sutton plans to add more employees in the next year.
The Next Frontier
Getting back to 2016, Sutton is already pleased with how well VAR has started the year, revealing that VAR is already reaping the rewards of some of the programs it entered into at the end of 2015.
“January and February of 2015 were not great months, so we’re starting off the year great. We’re actually 45% ahead on originations for those two months year-over-year,” says Sutton, who anticipates 30% overall growth this year. “The relationships and the programs that we landed in 2015 are starting to develop and grow.”
While he expects that VAR will have strong growth, Sutton is less bullish about the equipment industry as a whole, warning that bank regulations may hold someback and put increased pressure on captive and independent finance organizations to come up with more creative solutions.
VAR is one independent that appears poised to continue its upward trajectory by continuing to do what it has been doing for nearly three decades: adapt and prepare for what’s next. Sutton says that infrastructure as a service and the utility computing model will be the next areas of focus.
“We’re really working toward the next frontier for us, which is infrastructure as a service or the utility computing model,” Sutton says. “Infrastructure as a service is essentially offering the ability for customers to acquire hardware and software as a service instead of a traditional financing vehicle, which would make it more of an operating expense. There’s a need in the market to acquire hardware, software and networking through more of a pay-as-you-go model or as a service model. That’s what we’re working on right now. That’s the next big frontier.”