Jackpot? Kenzie Academy Raises $7.77 Million to Build Tech Talent in Overlooked Places
If one were to name the top tech companies that people want to work for, the FAANGs wouldn’t be a bad bet. But that’s not the case for the students at Kenzie Academy, which provides technology training and job placement programs targeted to students in communities far away from the usual tech hubs. Think Alabama, not Austin. Many prefer to stay local, closer to home.
“We want to help students in communities that are underserved—in places that are not the usual San Francisco or New York tech centers,” says Kenzie’s CEO and co-founder, Chok Leang Ooi. “Going forward, we don’t think Silicon Valley will be the only place where new companies are being formed.”
As investors eye middle America as the next—and less expensive—opportunity for financial returns, some are betting on Kenzie Academy to drive that engine of growth. Today, the Indianapolis-based company raised a Series A round totaling an auspicious $7.77 million.
“It comes with a Boeing plane,” Ooi jests.
Leading the round is Rethink Education, a New York-based education investment firm. Other investors include Revolution’s Rise of the Rest Seed Fund, Strada Education Network, LearnStart, Peak State Ventures, Flat World Partners and Kelly Services.
Rethink’s managing director Matt Greenfield, along with Rippleworks CEO Doug Galen and Travelocity founder Terry Jones, have joined the company’s board of directors as part of the round.
To date, Kenzie has raised $13.6 million. This latest capital infusion comes about a year after its $4.2 million seed round. At that time, the company was serving about 75 students for its in-person program, hosted on the campus of Butler University in Indianapolis. The seed funding went toward building Kenzie’s online training programs, which launched this January.
Ooi claims Kenzie is on track to enroll more than 400 students by the end of 2019. Yet that’s just a fraction of the roughly 7,000 applicants his team has received. “That’s why we raised this round,” he says. “We are trying to grow and serve as much as possible.”
Its headcount has grown, too, from 15 full-time staff a year ago to 44 and counting today. In May, the company hired Dana Price as its chief financial officer. She spent the previous six years as a vice president at McGraw-Hill Education, overseeing its finance and M&A operations.
Founded in 2017, Kenzie currently offers 12-month training programs in software engineering and user experience and design. The company also offers a six-month digital marketing course.
The workload is intensive; classes run from 9 a.m. to 3 p.m., and students are expected to commit at least 40 hours each week in order to succeed.
Going forward, we don’t think Silicon Valley will be the only place where new companies are being formed.Kenzie Academy CEO and co-founder, Chok Leang Ooi
To ensure they are ready for that rigor, applicants must pass an attitude and aptitude assessment prior to acceptance. “We do ask that people put their lives on hold for 12 months and work hard. We can train them in the right skills, the right mindset and provide the right network. But the last piece of the equation is the work ethic,” says Ooi.
It’s a steep commitment, especially for the working adults who make up the majority of Kenzie’s students. Fifty-five percent are non-white, according to Ooi, and two-thirds have no postsecondary credentials and were making less than $30,000 per year prior to joining the program.
To help students pay their bills, Kenzie has partnered with Kelly Services, a staffing firm, to provide part-time work opportunities in customer and technical support. It’s not glamorous. But the upside is that Kelly provides training in customer service and troubleshooting support—skills that can be important as they prepare for full-time careers.
Kenzie charges $24,000 for its software engineering and user experience design courses, and $13,500 for its 6-month digital marketing offering. About 15 percent of students have paid upfront, according to Ooi. The rest enter into income-share agreements (ISAs), a tuition model increasingly popular among vocational programs where students pay nothing upfront but pony up a previously agreed-upon portion of their future salary.
In Kenzie’s case, students pay a $100 fee upfront, and 13 percent of their paycheck for two to four years after landing a job that pays at least $40,000 a year. Total repayment is capped at 1.75 times of the program’s upfront tuition cost.
Unlike other coding schools that sell ISAs to private investors to get cash upfront, Ooi says that Kenzie retains ownership of ISAs “to ensure that we have skin in the game and an incentive to serve our students.”
By the end of October, nearly 100 students will have gone through Kenzie’s programs. The company boasts a 90 percent job placement rate for graduates, at companies including Angie’s List, Crafted, DMI, Ford Mobility, Tangoe and Zylo. Most make between $55,000 to $90,000 salary in their new roles, according to Ooi.
Those companies may be unfamiliar to those living on the coasts. But not to Kenzie’s students, many of whom hail from the Midwest. For them, “the local and regional companies are the ones that they aspire to and want to work for,” says Ooi. “These are the companies in their communities, that they read about in their newspapers.”
About 90 percent of the company’s partnering employers are based in areas outside of the San Francisco and New York City regions, he adds, and it is looking to expand this network across Alabama, Michigan and Ohio.
Indianapolis holds a special place for Ooi. He considers it his American hometown, where he first lived after immigrating from Malaysia in 2009 “with two suitcases and a pocket full of hope.” In 2016, he left his previous job as CEO of AgilityIO, a technology consulting and development firm, to start Kenzie Academy after “seeing the heartland crying out for help and blaming outsourcing for the loss of jobs. But those jobs aren’t going to China or India. They’re being lost to automation.”
It sounds like a clip from Democratic presidential candidate Andrew Yang. But instead of promising everybody $1,000 every month, Ooi wants to help people upskill and get tech jobs.
“The only way to get new companies in these parts of the country is to build up a pipeline of technical talent, and that’s our mission: to give people access to opportunities outside of the major tech hubs, and to help homegrown companies thrive.”