While many startups struggle to raise capital and stay afloat, Kandji, an Apple device management platform, is an exception. Founded in 2019, Kandji has blazed through funding rounds like a precocious child, raising more than $188 million to date.
Today, the company added to that total by raising an additional $100 million from General Catalyst, half of which is additional equity and the other half is debt securities. Today's round brings the company's total funding, including debt, to more than $288 million. It also increased its valuation from $800 million to $850 million since its last round in 2021.
The company has made a name for itself by helping IT departments manage their organizations' growing lists of Apple devices in a modern, streamlined way. And this approach seems to be working, as Kandji is rapidly growing revenue and customers: Since its 2021 round, the company reported a 600% increase in annual recurring revenue (ARR) and a fourfold increase in its customer base to 4,000 global customers.
Adam Pettit, CEO and co-founder of the company, says part of that growth is due to expansion outside the U.S., which had already begun when we last spoke with him in 2021. “Over 30% of our customer base and over 30% of our revenue is outside of North America, and we think that growth is pretty significant,” Pettit told TechCrunch.
Another factor contributing to the company's growth is the expansion of its platform from pure device management to endpoint security: “In our last funding round, we started to really invest in endpoint security in addition to our endpoint management capabilities, and last year we released our second product, an endpoint detection and response product,” he said.
Pettit said the company has seen explosive growth in the product, which is contributing to overall ARR growth. Kandji has used traditional machine learning under the hood of its product for years now, but plans to add generative AI capabilities in the coming months.
He said the company competes against legacy players like Apple and Jamf, as well as other mobile device management (MDM) vendors, but consistently beats them. “We compete against everyone in the market, and I would say our win rate against legacy MDM solutions is very high. So there are two key things to note. First, two-thirds of our business worldwide in any given quarter comes from rip-and-replace. Two-thirds has been that way for multiple quarters. The other third is really greenfield customers. These are customers buying device management for the first time, or buying InfoSec,” he said.
While the valuation hasn't increased dramatically since the last round, Pettit correctly points out that 2021 was a very different time for venture capital: Interest rates were still low, valuations were many and overvalued, and companies struggled to live up to them in the years that followed. Seeing his startup's valuation increase, even slightly, feels like a win to him.
“We've actually been fortunate in that we've grown very quickly and built a very impressive business over the last two and a half years since we last spoke, reaching and now exceeding our last valuation, which I think is more than a lot of companies can say,” Pettit said.
He said the 50/50 split of equity and debt in this round was intentional, with half being dilutive and the other half non-dilutive. The debt financing is specifically designed to help with investments in sales and marketing, with a set amount set aside each quarter for investments that will then be repaid based on sales success.