Email Delivery Platform Mailgun Spins Out from Rackspace, Raises $50M in Financing

Email automation platform Mailgun has raised $50 million in financing as it has spun out from Rackspace and become an independent company.

Rackspace acquired Mailgun in August 2012 to add an easy-to-use email delivery service for developers. Mailgun offers a set of APIs that allows users to send, receive and track emails from within their applications.

The $50 million financing round is led by Turn/River Capital with participation from Scaleworks and Rackspace. The funding will help accelerate Mailgun’s product roadmap, drive growth initiatives and expand customer support, according to an announcement on Wednesday.

Spinning out its Mailgun division is the latest change for Rackspace, who was recently acquired by private equity company Apollo Management in November. Earlier this month Rackspace eliminated about 275 jobs, or 6 percent of its total U.S. workforce, as part of an effort to reduce operating expenses in the quarter and focus on high-growth areas of the business, like managed AWS and security.

Mailgun will be led by William Conway, CEO, who previously served as GM of Mailgun within Rackspace. Conway, in a blog post on Wednesday, said that as a standalone company, Mailgun will “again have the flexibility to invest in everything from product to sales without having to compete with other initiatives in a much larger organization.”

Conway said that “[n]early every Mailgun employee and all of leadership is continuing with the new organization and excited about the mission ahead of us.” He also assured customers that the company is growing, and hiring across its engineering, support, sales and marketing teams.

“Developers are at the heart of everything we do. We are focused on solving the daily problems developers face when integrating and managing email inside of their applications. Our independence and influx of growth capital will allow Mailgun to drive a product vision that will thrill developers when they see what is coming down the pipe,” Conway said in a statement. “Turn/River Capital’s experience growing similar developer tools makes them a perfect match to help drive Mailgun’s continued growth.”

Existing Mailgun customers include Slack, GitHub, Stripe and Lyft. Mailgun will continue to be headquartered in San Antonio with offices in San Francisco and Austin.

“Mailgun has grown consistently by providing the most scalable and developer friendly email sending infrastructure. It’s used daily by thousands of developers who build their app’s email communication entirely on top of Mailgun’s easy to use APIs,” Dominic Ang, Turn/River Capital’s founder and Managing Partner said. “We are excited to provide capital and our own unique operational expertise in SaaS sales and marketing in support of the Mailgun team as they aim to solve email deliverability for all customers.”