K2, a company that helps companies build business apps, has raised more than $100 million from Francisco Partners in a Series C round of capital. The Bellevue-based firm previously raised $16 million in 2006. Francisco will pick up two board seats as part of the deal.
As a firm, K2 has seen quick growth in recent years. The company told TechCrunch that its subscription revenue has grown 430 percent in the last four years. K2 expects to generate revenue of
$75 Update: $80 to $90 million in 2015, and indicated that it had revenue of between $60 million and $70 million in the last 12 months.
Let’s play fun with vanity metrics: K2 noted to TechCrunch that more than 20 percent of the Fortune 100 are its customers, and 45 percent of its top line comes from international sources.
A growing SaaS business that sells to enterprise clients raising more than nine figures? If that sounds almost banal in the era of Dropbox and Box, what makes K2 interesting is the lag between its last capital moment in 2006 (a bit ago) and today.
I spoke to the company’s CEO, Adriaan van Wyk, about the decision to raise more funds now; given that the company waited so long to do so, it quite obviously wasn’t burning much cash over the years or it would have died. The executive detailed his business strategy: K2 likes to spend money when it makes money.
Van Wyk told TechCrunch that his firm weathered the 2008 financial crisis, working to build out its product and set of intellectual property. Now, with a massive capital infusion (parts of the funds will go to cleaning up its capital table, and provide some employees with at least partial liquidity) it has the latitude to burn, accelerating its growth.
The firm’s focus on what it likes to call the “era of ‘Build Your Own Applications,'” or BYOA, is topical in the current technology market; apps are pervasive and increasingly mobile and cloud-based. More apps for more firms may mean more growth for K2.
Francisco Partners’ Brian Decker told TechCrunch that his firm was excited about K2 due to the size of the market that it sells into.
Any company in K2’s revenue range, with its presumable margins, and lack of negative profits is an IPO candidate in the current market. Again, I am predicating that based on its corporate history and prior raising schedule. I asked both van Wyk and Decker about the potential for the firm to go public, and whether they thought the IPO window would be open in 18 months. The answer was shrugs all around. Van Wyk reasoned that IPO windows have a tendency to reopen if they close, and Decker said that he wasn’t concerned about the question.
It is probably easier to be slightly blasé about future capital plans while still basking in the warmth of a current event, but the question remains interesting for the tech market in general. If the IPO window does close in the next 12 or 18 months, what does that implicitly mean for private valuations and the size of late-stage rounds?