SmartHRa cloud-based HR and work management software startup said Monday it raised $140 million in a funding round led by KKR and Teachers’ Ventures Growth, the investment arm of the Ontario Teachers’ Pension Plan, with participation from existing investors.
The Series E round, which comes three years after raising the company a $142.5 million (JPY 15.6 billion) Series D; in his estimation 1.6 billion dollarsis the latest sign that investors are still keen to back technology that helps companies more effectively manage their biggest cost base: staff.
The company declined to comment on its current valuation.
Founded in 2015 by Kensuke Naito and Shoji Miyata, SmartHR has been in high demand for its SaaS platform, which helps businesses manage and streamline their human resources and operations, over the past two years. Its annual recurring revenue (ARR) has reached $100 million by February 2024, a company spokesperson told TechCrunch, which is a decent jump from the $80 million in total revenue it reported in fiscal 2023.
This growth is in line with the strong demand for HR technology we’ve seen elsewhere in the world. US-based Rippling, which SmartHR says is the closest comparable in terms of product and strategy, saw ARR double to $350 million in 2023. according to the Information. Gusto, which offers payroll management software and services, told TechCrunch that its revenue had surpassed $500 million by April 2023. and Deel, which manages payroll for companies on international lines, in March reported that it had annual ARR of more than $500 million;
There’s also a mountain of venture capital in this market, estimated to be worth $81.84 billion by 2032, per Fortune Business Insights. Rippling, one of the largest startups in the space, has raised about $1.4 billion, per a Rippling spokesperson, and said it was valued at $13.5 billion after a $200 million funding round in April. Gusto has raised nearly $750 million, Crunchbase data says, and is worth about $9.6 billion, per PitchBook. And Deel, valued at $12 billion, has raised a total of $679 million, according to Crunchbase.
And you have investors pouring cash into smaller startups attacking almost every aspect of traditional HR: Remofirst, which helps clients recruit globally without setting up local offices, recently raised $25 million. Palm is taking a mobile-first approach to improving the HR technology experience in MENA, and last year took in $5 million. Compa in January raised $10 million to build its platform that provides recruiters with aggregated compensation data so they can be more competitive when hiring. and Legion raised $50 million last month to automate hourly workforce management for companies.
SmartHR partners in Japan include back-office software players such as Works Human Intelligence, freee and Moneyforward. The company stands out by “getting the latest and most accurate employee data through work management, which positions it as the HR system of record,” its spokesperson said, adding that leveraging that employee data allows it to develop new products quickly.
The startup said the new capital will go towards developing new solutions and hiring, as well as organic and inorganic (read: M&A) growth strategies. It currently employs approximately 1,000 workers.
Previous backers include Light Street Capital, Sequoia Capital Global Equities and Whale Rock.
Updates with Rippling’s total funding amount
