Smart HROntario Inc., a cloud-based human resources and employment management startup, announced Monday that it has 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 investors. Current ones.
The Series E round, which comes three years after the company raised Series D at $142.5 million (¥15.6 billion). When estimated $1.6 billionIt’s the latest sign that investors are still keen to back technology that helps companies manage their largest cost base more efficiently: employees.
The company declined to comment on its current valuation.
Founded in 2015 by Kensuke Naito and Shoji Miyata, SmartHR has seen strong demand for its SaaS platform, which helps companies manage and streamline HR and operations, in the past two years: Its annual recurring revenue (ARR) reached $100 million as of February 2024, a company spokesperson told TechCrunch, which shows a decent bump from the $80 million in total revenue it reported in fiscal 2023.
This growth is in line with the strong demand for HR technology seen in other parts of the world. US-based Rippling, which SmartHR says is the closest comparable company in terms of products and strategy, has seen its annual revenue double to $350 million in 2023, For all information. Gusto, which provides payroll management software and services, told TechCrunch that its revenue exceeded $500 million by April 2023; Deel, which manages payroll for companies across international routes, said in March this year that it had recorded an ARR of more than $500 million.
There is also a mountain of venture capital in this market, which is expected to be worth $81.84 billion by 2032, Fortune Business InsightsRippling, one of the biggest startups in the space, has raised about $2 billion, according to Crunchbase, and said it has a valuation of $13.5 billion after a $200 million funding round in April. Crunchbase data says Gusto has raised nearly $750 million, and is valued at about $9.6 billion, according to PitchBook. Deel, which is valued at $12 billion, has raised a total of $679 million, according to Crunchbase.
And you have investors throwing money at small startups that attack almost every aspect of traditional HR: Remofirst, which helps its clients hire globally without setting up local offices, recently raised $25 million; Palm is adopting a mobile-first approach to improving the HR technology experience in the MENA region, and last year secured $5 million; Compa in January secured $10 million to build its platform that provides recruiters with aggregated compensation data so they can be more competitive when hiring; Last month, Legion raised $50 million to automate hourly employee management for companies.
SmartHR’s counterparts in Japan include office software companies such as Works Human Intelligence, freee, and Moneyforward. The company is distinguished from others by “obtaining the most up-to-date and accurate employee data through labor management, which places it in the ranks of the human resources system of record,” the company spokesperson said, adding that leveraging this employee data allows it to deploy new products quickly.
The startup said the new capital will go toward developing new solutions, hiring, as well as organic and inorganic growth strategies (read: mergers and acquisitions). It currently employs about 1,000 employees.
Its previous backers include Light Street Capital, Sequoia Capital Global Equities and Whale Rock.