Koan Raises $1M & Launches Free OKR Software

Koan, a company specializing in objectives-and-key-results (OKR) and progress-monitoring software, recently revealed it has secured an additional $1 million in funding, introduced a complimentary service level, and completed the acquisition of a design agency it had previously collaborated with.

Koan, which initially gathered $3 million in seed investment last October, was established by Matt Tucker, also a co-founder of Jive. Jive was a company concentrating on enterprise social networking, became a publicly traded entity in 2011, and was subsequently sold in 2017 for $462 million in cash.

The startup concentrating on OKRs operates within a competitive market. The market for goals-tracking software has experienced significant venture capital investment in the past year, with companies like Ally receiving $15 million in Series B funding, Gtmhub securing a Series A round, and WorkBoard completing a Series C financing, to name a few.

Further details regarding the definition and functionality of OKRs can be found in this explanatory article.

According to Tucker, in a discussion with TechCrunch, the foundational principle guiding Koan’s software development is the idea that consistent, incremental positive steps will ultimately lead to substantial results.

With this concept in mind, Koan provides not only the standard OKR tools, but also a check-in function that allows team members to communicate their performance and advancement. This information is then compiled across teams, offering a comprehensive understanding of employee sentiment regarding specific key results. Consistent updates from individuals regarding their progress contribute to a more accurate assessment of the company’s overall progress toward its objectives.

Growth plans

Koan is implementing a growth strategy centered around product-led growth, sometimes referred to as product-led selling. OpenView Partners characterizes this approach to market as “[A] growth model prioritizing the end user and leveraging the product itself to primarily drive customer acquisition, conversion, and expansion.”

This strategy is cost-effective, and can be highly successful when implemented effectively.

Product-led growth strategies are particularly beneficial for software products that attract individual sign-ups, which then lead to those users inviting their coworkers. This method has gained traction with software designed for collaboration, making it a potentially suitable approach for Koan; if one team within a company adopts the startup’s software, its usage could expand to other teams. This expansion would translate into increased revenue for Koan.

To increase the number of users and encourage widespread adoption, Koan is introducing a free tier to its service. In marketing terms, the company aims to broaden the initial reach of its sales process.

If this initiative proves successful, Koan could transition from its current seed stage to being prepared for a Series A funding round. The recently acquired capital will support this effort, with the funds allocated to expanding the engineering team and to “accelerate [its] product led growth,” according to the CEO.

BMNT provided the new investment.

Furthermore, Koan has acquired Horrible Design Co., a company with which it has an existing working relationship. Horrible Design Co. has historically provided product and design support to early-stage startups.

The market for OKR software is highly competitive. Various startups employ different pricing models, including paid subscriptions, free access, and freemium options. Koan has now chosen to align with the freemium model. It remains to be seen whether the 2021 planning cycle will help the company attract new users, as its CEO anticipates, and generate the revenue growth expected by its investor.