Business Software Provider K2 Raising $100M+ From Francisco

K2, a 15-year-old business software company formed in South Africa and based in the Seattle area since 2004, said it is raising more than $100 million from private equity investor Francisco Partners.

The company, a Microsoft partner that provides software and services to help businesses build and run a range of custom applications, will invest the capital “across all fronts” of its business, including research and development, possible acquisitions, and marketing, said co-founder and CEO Adriaan van Wyk.

“Some liquidity is being provided for existing shareholders,” he said in an e-mail interview.

Francisco Partners is the only investor in what van Wyk said is K2‘s Series C funding round, set to close this quarter. “There were not a lot of sellers in the business,” he said. “Our existing investors”—including Azure Capital Partners and FTV Capital—“decided to maintain positions, supporting the future of the business.”

van Wyk

van Wyk

He would not say specifically how much is being invested, “but it is an amount that is significantly above the $100 million mark.” The company has raised $16 million previously, he said.

K2 expects 2015 revenue in the range of $80 million to $90 million, van Wyk said, up from $60 million to $70 million last year. “In terms of profitability, we generate cash but have budgeted to invest back into our own business,” he said. “Much like many of our successful peers in this industry, we were funding it ourselves and kept the balance at break-even. Its been working well for us and I don’t plan on straying far from that strategy over the next few years.”

In its early days, K2 was primarily a Microsoft independent software vendor, consistently earning awards from the software giant. It moved its headquarters to Redmond, WA, in 2004; the company is now based in nearby Bellevue. It has about 80 local employees out of a 430-person global staff.

The company still does lots of work with Microsoft, but it’s no longer the main thrust of its business, focusing more now on its own solutions.

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