Tech apprenticeship and coding school Kenzie Academy on Monday announced it has secured $7.8 million in venture funding—money it plans to use to expand its tech-focused educational offerings and grow its enrollment nationally and in Indianapolis.
Indianapolis-based Kenzie closed on the Series A round on Thursday. Series A typically refers to a company’s first significant round of venture capital financing.
Kenzie previously raised two rounds of seed funding: $1.6 million shortly after it was founded and opened its Indianapolis facility in September 2017 and $4.2 million in July 2018. Its most recent round brings its total to $13.6 million.
Kenzie Academy’s college-alternative model offers six months to one year of on-campus or online training in software engineering, UX engineering or digital marketing, plus opportunities for an optional apprenticeship. Students aren’t required to pay tuition until they get a job earning at least $40,000 annually.
Chok Ooi, co-founder and CEO of Kenzie, said investors are impressed with the demand for the academy’s services.
“The demand for this type of education and training is there on the employer side and on the student side,” Ooi told IBJ. “Every company is becoming a tech company now, so there’s going to be a massive need for technical talent. A lot of workers have been disrupted by the changing economy and are looking for re-training and new opportunities.”
Kenzie’s latest round of funding was led by New York-based ReThink Education, which had previously invested in Kenzie.
Other investors include Washington, D.C.-based Revolution’s Rise of the Rest Seed Fund; Indianapolis-based Strada Education Network; Flat World Partners and LearnStart VC, both of New York; San Francisco-based Peak State Ventures; and Troy, Michigan-based Kelly Services, through the Kelly Innovation Fund.
“Right now, 75% of venture capital is concentrated in three states: California, New York, and Massachusetts,” Steve Case, chairman and CEO of Revolution, said in a written statement. “Kenzie Academy is not only demonstrating that exciting innovations can start and scale outside of Silicon Valley, but that a lot of talent exists outside of the coastal tech corridors to fuel the growth of startup ecosystems in the middle of the country.”
Ooi said Rise of the Rest has expressed interest in funneling Kenzie graduates to its portfolio companies in need of tech talent.
“These relationships go beyond just the infusion of cash,” Ooi said.
When its new class starts in October, Kenzie will have 400 students. That’s up from 75 last year, Kenzie officials said.
While Kenzie teaches students at its Indianapolis facility at 47 S. Meridian St., many of its students attend classes through real-time video conferencing and the Internet. Kenzie has students in 40 states. With the investment, Ooi said Kenzie will “aggressively recruit students in all 50 states.”
“We’re going to get a lot bigger and really spread our reach,” Ooi said. “Our goal is to train 10,000 people over the next three years.
Kenzie, which has about 40 full-time employees and plans to add another 10 in the coming months, boasts an 81% graduation rate. Of those graduating from Kenzie’s 12-month program, Ooi said 90% attain full-time tech jobs within six months of graduation.
“We’re getting a lot of people who have lost jobs or were making minimum wage in manufacturing, retail and food services,” Ooi said. “Sixty-seven percent of our students were making less than $35,000 a year, and we’re placing them in jobs that make between $55,000 and $90,000 a year.”
While Kenzie is not yet profitable, the academy is on course to get there, Ooi said.
“Given the demand we see, we’re focused on increasing market share and access to students,” Ooi said. “Our plan long-term is to be profitable and sustainable.”
For now, Kenzie has no plans to add a second physical location, Ooi said, but that could change if circumstances dictate.
“If we see a large cluster of students coming from one region or if we have an employer who has plans to hire a lot of Kenzie graduates, we would consider that,” Ooi said.