SmartHR, a cloud-based human resources and workforce management software startup, said Monday it has raised $140 million in a funding round led by KKR and Teachers' Ventures Growth, the investment arm of the Ontario Teachers' Pension Service, with participation from existing investors. .
The Series E round, which comes three years after the company raised $142.5 million (15.6 billion yen) in a Series D at a valuation of $1.6 billion, aims to help investors more efficiently manage their employees, their largest cost base. It's the latest indicator that we're still interested in the technology that helps us do that.
The company declined to comment on the current valuation.
Co-founded by Kensuke Naito and Shoji Miyata in 2015, SmartHR has seen a significant increase in demand over the past two years for its SaaS platform that helps businesses manage and streamline their human resources and operations. A company spokesperson told TechCrunch that as of February 2024, it had reached $100 million in annual recurring revenue (ARR), which represents a significant increase from the $80 million in total revenue it reported in fiscal 2023.
This growth is consistent with the strong demand for HR skills we are seeing in other parts of the world. US-based Rippling, which SmartHR says is the most similar company in terms of product and strategy, has doubled its ARR to $350 million in 2023, according to The Information. Gusto, which provides payroll management software and services, told TechCrunch that it had more than $500 million in revenue by April 2023. And Deel, which manages payroll for international companies, said ARR exceeded $500 million in March this year.
There is a lot of venture capital in this market, which is estimated to be worth a whopping $81.84 billion by 2032, according to Fortune Business Insights. Rippling, one of the industry's largest startups, said it has raised about $2 billion, per Crunchbase, valuing the company at $13.5 billion after a $200 million funding round in April. Gusto has raised nearly $750 million and is valued at about $9.6 billion, per PitchBook, according to Crunchbase data. And Deel, valued at $12 billion, has raised a total of $679 million, according to Crunchbase.
And investors are throwing cash at small startups that are attacking nearly every aspect of traditional HR. Remofirst, which helps clients recruit globally without setting up a local office, recently raised $25 million. Palm has taken a mobile-first approach to improve the HR technology experience in the MENA region and received $5 million last year. Last January, Compa invested $10 million to build a platform that provides recruiters with aggregated compensation data to help them be more competitive when hiring. And Legion last month raised $50 million to automate the company's hourly employee management.
SmartHR's competitors in Japan include back-office software companies such as Works Human Intelligence, freee, and Moneyforward. The company differentiates itself by “positioning itself as HR's system of record by ensuring that workforce management has the most up-to-date, most accurate employee data,” which allows it to quickly deploy new products, the spokesperson added. .
The startup said the new capital will be used to develop new solutions, hire, and develop organic and inorganic (read: M&A) growth strategies. It currently has about 1,000 employees.
Previous investors include Light Street Capital, Sequoia Capital Global Equities, and Whale Rock.
