SmartHRThe cloud-based human resources and labour management software startup said on Monday it has raised $140 million in a funding round led by KKR and Teachers Ventures Growth (an investment arm of the Ontario Teachers’ Pension Plan), with participation from existing investors.
The Series E round, which comes three years after the company last raised funds $142.5 million (15.6 billion JPY) Series D on the evaluation of $1.6 billionIt’s the latest indicator that investors are still eager to back technology that helps companies more efficiently manage their biggest cost base: employees.
The company declined to comment on its current valuation.
Co-founded in 2015 by Kensuke Naito and Shoji Miyata, SmartHR has seen strong demand for its SaaS platform, which helps enterprises manage and streamline human resources and operations, over the past few years: a company spokesperson told TechCrunch that it expects to reach $100 million in annual recurring revenue (ARR) by February 2024, which represents a decent increase from the $80 million in total revenue reported in fiscal 2023.
This growth is in line with the strong demand for HR technology we are seeing in other parts of the world. US-based Rippling, which SmartHR says is its closest comparable company in terms of products and strategy, doubled its ARR to $350 million in 2023, As per the information. Gusto, which provides payroll management software and services, told TechCrunch Its revenue was expected to surpass $500 million by April 2023; and Deal, which manages payroll for companies internationally, this March Said It had generated an ARR of over $500 million.
There’s also a mountain of venture capital invested in this market, with one estimate putting it at $81.84 billion by 2032. Fortune Business InsightsRippling, one of the biggest startups in the sector, has raised nearly $2 billion, according to Crunchbase, and said it is valued at $13.5 billion That follows a $200 million funding round in April. Gusto has raised about $750 million, according to Crunchbase data, and is valued at about $9.6 billion, according to Pitchbook. More deals, worth $12 billionhas raised a total of $679 million, according to Crunchbase.
And you have investors who are pouring money into small startups that attack nearly every aspect of traditional HR: RemoFirst, which helps its clients hire globally without setting up a local office, recently raised $25 million; Palm has taken a mobile-first approach to improving the HR tech experience in MENA, and last year got 5 million dollarsIn January, the company 10 million dollars received to build its platform that provides recruiters with aggregated compensation data so they can be more competitive when hiring; and Legion raised $100 million last month $50 million Automating hourly staff management for companies.
SmartHR’s counterparts in Japan include back-office software players such as Works Human Intelligence, Free and MoneyForward. The company differentiates itself by “obtaining the latest and most accurate employee data through labor management, which positions it as the system of record in HR,” its spokesman said, adding that leveraging this employee data enables it to deploy new products faster.
The startup said the fresh capital will be spent on developing new solutions, hiring, as well as organic and inorganic (read: M&A) growth strategies. It currently has around 1,000 employees.
Its prior backers include Light Street Capital, Sequoia Capital Global Equities and Whale Rock.
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