Bellevue software company K2 raised a whopping $100 million to accelerate its business making tools that other companies use to build apps.
The company started in 2001 and grew as an independent software vendor allied with Microsoft. But all along the plan was to become a full-blown software company, according to Adriaan van Wyk, co-founder and chief executive.
Now the company has more than 1,500 customers around the world using its platform to build business applications. Demand is being created in part by younger tech workers who expect applike capabilities at companies using traditional enterprise systems. That’s putting pressure on corporate tech departments to keep up.
“We have a platform for companies to build modern business applications with very little code and we’ve seen tremendous adoption in that space,” van Wyk said.
K2 was bootstrapped and “spent money when we made money,” van Wyk said by phone during a visit to his native South Africa.
“We really wanted to reach a critical mass point before we started diluting shareholding in the business because we believed what we were building was something special,” he said.
It did take around $16 million in outside investment in 2006 and is now taking “over $100 million” from Francisco Partners, a San Francisco private equity firm that’s invested in several Seattle area enterprise software companies. The funding deal was announced today but is expected to close in the first quarter.
A decade ago Francisco Partners was part of an investment group that bought Seattle’s WRQ and later merged it with Attachmate and several other software companies. The bundle was sold in September to British software company Micro Focus for $1.2 billion.
With K2 the plan is for the company to make acquisitions on its own as a stand-alone company, van Wyk said.
“I don’t see us rolling into a larger business,” he said.
K2 will use the money to invest in new software and expand further in Europe and Asia. It also plans to make acquisitions, grow its Bellevue operations and invest in more research and development.
Sales are strong, with subscription sales growing in “double digits” and overall sales between $60 million and $70 million last year, van Wyk said. This year sales should be $80 million to $90 million.
Being in a fast-growing category with a mountain of capital should help K2 continue competing for tech talent in the Seattle area.
“We’re definitely seeing the competition from Microsoft, Amazon.com and Google, but it’s fascinating. There are talented people there who want to work for smaller companies, who are entrepreneurial, and find a place where they can make a mark,” van Wyk said.
The company started in South Africa but moved to Seattle in 2004 after a lucky break.
Originally the plan was to move the company to Denver because of its central location. But during one of the founders’ frequent visits to Seattle and Microsoft, van Wyk went to T-Mobile in Factoria to buy a phone. In addition to a phone, he met a local woman working at the store, fell in love and married her three years later. With family in the area, he moved to Seattle instead.
K2 now has 430 employees around the world including 80 to 90 in Bellevue.
Meanwhile, van Wyk still has the same mobile number — and wife — though he’s now using AT&T.