$550M funding haul for Irvine’s Kajabi

INNOVATION: Online platform for entrepreneurs

Kajabi LLC, an online software platform for small businesses and entrepreneurs, said last week it raised $550 million in a new financing round that pushes the company’s valuation past $2 billion.

The Irvine-based company, founded in 2010, helps its members build and manage websites and digital offerings such as online courses, membership communities, podcasts and more.

It’s powering what it calls the knowledge economy—a community of creators with shareable skills—as people increasingly turn to the web to meet professional and casual learning needs.

“Kajabi has the best product out there right now for knowledge entrepreneurship and we want to

double down on that,” Chief Executive Kenny Rueter told the Business Journal.

The company has more than 43,000 active users in 120 countries that have collectively helped over 50 million people access educational content spanning business and finance, marketing, personal development, and health and fitness, among others. Its 2020 revenue is estimated to be in the $70 million range.

Kajabi intends to use new funds to scale its team, broaden product offerings, expand internationally and explore mergers and acquisitions that can bolster its product portfolio and geographic reach.

“We are currently the market leader and we want to stay that way,” Rueter said.

“There is huge global demand for a knowledge commerce platform like Kajabi and we want to lead the charge in expanding.”

Supporting Cast

Kajabi’s new round of financing—the largest reported deal for a privately held Orange County company this year—supplied ample funds and industry expertise.

The round was led by Tiger Global Management, a New York-based hedge fund and venture firm with over $65 billion assets under management. It’s also an investor in Irvinebased restaurant management software firm Restaurant365.

Additional participants included TPG, Tidemark, Owl Rock Capital and Meritech Capital. As part of the investment deal, Scott Wagner, former CEO of GoDaddy and a Tidemark advisor, will join Kajabi’s board of directors.

“Kajabi has pioneered the exploding knowledge economy and has built a fantastic product suite and all-up experience to power knowledge entrepreneurs across a host of industries,” Wagner said in a statement.

New investors join Spectrum Equity,a growth equity firm that took an undisclosed minority stake in Kajabi in late 2019. Prior to the deal, Kajabi was a bootstrapped, profitable company for its first 10 years of business.

Customer Centricity

Kajabi describes its platform as a one-stop shop for entrepreneurs with “everything you need to grow in one place.”

Users can set up and manage their own website, product offerings, marketing campaigns and community members from a single dashboard—and make use of how-to videos and tips via the company’s Kajabi University product.

Unlike other online business products, Kajabi gives users complete autonomy to monetize their business and generate revenue streams without taking a cut of the profits.

“We firmly believe that our customers should be empowered to have their own brands and businesses, and not be encumbered by us,” Rueter said.

To that end, customers only pay a monthly subscription fee for the Kajabi platform. The company offers a 14-day free trial and plans range from $119 to $319 a month for an annual membership.

Upgrade features include round-the-clock chat support, advanced automations, the ability to remove Kajabi branding, an affiliate program and a dedicated code editor.

Strength of Community

By enabling seasoned business owners and first-time entrepreneurs to control their pricing, Kajabi said it has built a resilient community that didn’t skip a beat amid the pandemic.

“We continually put our customers first, and as thousands of people were pivoting and trying to survive the impacts of 2020, we provided a way for them to scale and function amidst closures all while achieving a level of financial freedom,” Rueter said.

“We’ve built a community of knowledge entrepreneurs around Kajabi who cheer each other on, help each other out, and share when they reach new milestones in their own businesses. This provided social proof and encouragement to others who may be struggling.”

The company’s customers have generated over $2.5 billion in gross merchandise value, including $1 billion in the last 12 months alone, he said. Now, customers are collectively on pace to earn $1.5 billion annually.

Doubled in Size

Quick growth for the business spurred a hiring spree in the last two years.

Kajabi has quadrupled its headcount since the beginning of 2019, and that year signed a lease to double its office space to 43,800 square feet at Spectrum Terrace. The company more than doubled in size again in 2020 to about 213 employees.

Kajabi is working 100% remotely at this time and plans a return to its Irvine headquarters at the beginning of September.

In response to the rapid growth in employees, and challenges from working at home, “we made a concerted effort to ensure all new and existing team members were aligned by creating a ‘Kajabi Manifesto,’” Rueter said.

The nearly 10-page document “takes a deep dive on Kajabi’s customer-first culture, history, mission, guiding principles, differentiators, and expectations—all to encourage team members during this period of hyper-growth to continue playing off the same sheet of music. This clarity across our internal team has created clarity for our customers and a vision that supersedes the Kajabi team,” he said.

The company listed 31 open positions, ranging from customer experience, engineering, product and other positions, on its website at press time.