Why We Raised $150M
Today we closed a $150M series B financing and added a great new partner to Klaviyo, Summit Partners. Klaviyo is profitable, growing fast — we’re expecting to more than double customers this year — and didn’t need to raise this round. But we did, and this blog post is about why, what will change and what won’t.
When we started Klaviyo, Ed and I didn’t raise any money for two reasons. First, we didn’t want to be one of the startups that raises a $1M, builds a product, finds some customers, never gets profitable and gets acquired by some bigger company for $10M. We came from families that started small businesses from scratch and ran them for decades. They may not have been huge, but they were real, lasting businesses. We wanted to try to build something like that. The second reason is much less idealistic. We had no idea how to raise money.
We were fortunate to have saved up enough we could live off our savings for a while and in a year we’d either figure out how to build a business that supports itself or we wouldn’t. It didn’t take a year to figure that out, it took almost three. Those were three challenging and fun years.
In 2015, we decided to raise money for the first time. We were profitable, growing fast and making hiring decisions based on how much we grew the previous month. We agreed that was a dumb way to make hiring decisions. We didn’t want to miss out on working with someone great today because we needed another month to afford it. Raising money meant we could meet great people at any point in time and always get to work with them.
Our culture didn’t change. Our phones still buzzed every time a customer emailed us. We still spent hours whiteboarding product. We still walked down Boylston Street every Thursday to buy laptops for folks starting on Monday. We still invested every dollar we made back into our product and our customers. We still took accountability for making sure every business on Klaviyo had a great experience and was growing. We still met as a team every Friday to share our successes and failures. The big change was Fridays got a lot more crowded and hundreds of customers grew to thousands.
We carried on and after several more years of talking with our customers — startups, scale ups and category leaders — we learned that everyone wants to deliver amazing experiences to their customers. They want to be in control of those experiences. They want to own those experiences.
So far, we’ve focused our attention on email, the most important owned channel. We delivered emails and experiences that resulted in 1% of all ecommerce sales on Black Friday. We’re very proud of that, but there is still 99% of the pie we’re not helping with. We’re concerned that big pieces of that pie are through channels brands can never own because they’re dependent on ad networks and marketplaces that may change their rules or not be there someday. Klaviyo exists to help businesses grow. We believe the most reliable and enduring way to grow is for businesses to own the entire customer experience. We call that owned marketing.
We raised this round to make owned marketing easier and a more scalable way to grow than selling through Amazon or running ads on Google or Facebook. We know that’ll be difficult, but we love hard problems and that’s what every single Klaviyo signed up for. We’ll hire engineers, designers and customer-first folks who want to move fast. We’ll listen patiently to our customers and partners. And we’ll provide a great place to learn and grow, just as we’ve done for the last seven years.
We won’t change our culture or values. For us, it’s all about code, customers and design. It’s helped us build a community of more than 15,000 customers and thousands of partners all aligned around our collective mission of helping businesses grow faster by owning their brand and their voice. Instead, we’ll invest in scaling and spreading our values within Klaviyo and beyond.
Over the coming months, we’ll share more about what we have in store. You can expect more features, new products and maybe a new partner or two that joins us to help our customers grow faster.
We’re humbled and thankful to everyone who’s helped us get this far. We have a lot of people to thank starting with our users, customers and partners who’ve grown with us. We’re excited to work with the Summit team and put their experience helping companies scale to work for the entire Klaviyo community. With the Boston Marathon a week away and having run it once before, this feels like that first mile. It’s really exciting, but we’re planned and prepared for the long run.Back to Blog Home