WP Engine, which provides hosting for WordPress-built websites, said Thursday it has raised a whopping $250 million to fuel its growth.
The Austin-based company received the funding from Silver Lake, a marquee private equity investment firm. Founded in 1999, Silver Lake is one of the largest technology investors in the world. In 2013, the firm teamed with Michael Dell in his $25 billion deal to take Round Rock-based Dell Inc. private.
WP Engine said it will use the new funding to accelerate development of its digital platform and make an international expansion push.
The company, founded in 2010, said it recently topped $100 million in annual revenue and now has 75,000 customers worldwide, up 30 percent year-over-year. The company has 500 employees worldwide, including 435 at its downtown Austin headquarters.
“We are partnering with Silver Lake because of their incredible track record as technology investors, their understanding of digital platform businesses like ours and because of the alignment in the core values we share,” Heather Brunner, CEO of WP Engine, said in a written statement. “This partnership will help us further invest in our Digital Experience Platform and bring the power of our platform to WordPress users all over the globe.”
The deal is believed to be the largest single investment in an Austin technology company since vacation rental site HomeAway raised $250 million in 2008. Austin-based online coupon company RetailMeNot raised a single $100 million investment in 2011.
Both companies went on to have successful initial public offerings and were later acquired by larger players, HomeAway by online travel giant Expedia for $3.9 billion in 2015, and RetailMeNot by Harland Clarke for $630 million last year.
For WP Engine, the size of the investment and the fact that it came from one of the top global private equity firms is a significant endorsement and signals a wave of growth to come, said Kirk Walden, a Texas State University adjunct business professor and principal of Walden Consulting.
“You have the amount of money -- $250 million -- and you have Silver Lake, whose name alone is a credentialing factor,” he said. “That’s a double endorsement of the company.”
It also means more jobs for Austin, Walden said.
“The company’s going to grow significantly. Whether or not they go public is another question. But it’s going to mean more jobs and a higher profile for Austin,” he said. “And these jobs, which pay well, are the jobs you like to see created here.”
For Silver Lake, the deal is a chance to back a fast-growing company that is one of world’s largest WordPress hosts. WP Engine says it powers more WordPress websites than all other managed hosts combined.
“WP Engine’s enterprise-grade technology and excellent service enable its customers to rapidly create quality websites with best-in-class performance,” said Lee Wittlinger, managing director of Silver Lake. “We believe WP Engine is poised to take a leading global position in the fastest-growing WordPress ecosystem.”
The “WP” in the company’s name stands for WordPress, which is open-source software that manages the content on 29 percent of Internet websites, according to the company.
Industry analysts say the use of WordPress has surged because the software is open-source, affordable, flexible and easy to use both for smaller businesses just getting started online and larger companies.
At its core, WP Engine helps businesses and individuals build and run WordPress websites and applications. It hosts the sites on its servers and develops specialized software tools that help its customers create more advanced and powerful websites.
The company is also creating new analytics and software development tools.
WP Engine was founded by Austin entrepreneur Jason Cohen, who says he got the idea after becoming frustrated with other WordPress hosting services, which crashed often and were slow and unreliable.
“I started calling people and after 50 customer interviews I determined there were four things that were needed: speed, scale, security and great service,” Cohen said in an interview Thursday. “If you do those things, people would come and pay $50 a month for something they were only paying $5 a month for some other hosting service.”
Cohen -- who is now WP Engine’s chief technology officer -- started the company and became the first tenant at Austin tech incubator Capital Factory. Eventually, WP Engine outgrew Capital Factory and leased its own space at Fifth and Lavaca streets downtown.
Now the company, which previously raised about $40 million, is ready to launch a new wave of expansion, with plans to add workers in Austin as well at its offices in Brisbane, Australia, London and Limerick, Ireland.
Cohen said he doesn’t know whether an IPO is in WP Engine’s future.
“You could go public, you could be bought by someone, you could stay independent,” he said. “The thing that matters is building a great company that has growing revenue and profit margins, attracts and retains great talent and is a place where customers are voting by staying.”
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