HR tech startup Employment Hero has raised $167 million in a rare late-stage funding round at a higher valuation from Airbnb-backer TCV.
The Sydney, Australia-based company, founded in 2014, provides employee onboarding, HR, payroll, and employee benefits services for around 300,000 SMEs globally. Some of the fresh funds will be used to scale its operations in the UK and South East Asia.
The sizable growth funding round comes against the backdrop of a depressed market for venture capital-backed startups. The company was valued at $1.2 billion as part of the deal, up from $800 million previously.
“In terms of the market, we’ve had a lot of private equity funds tracking us for years and we’ve continued to perform and keep funds updated with our performance,” Employment Hero CEO Ben Thompson told Insider.
“We looked at where we are in terms of expansion globally and decided it was time to put our foot to the floor, the UK is a crowded market so we need to cut through the noise.”
Beyond its original mission of looking to digitize the often outsourced and analog world of employment functions, Employment Hero wants to make a larger play into financial services using the reams of data accrued from its dealings.
For example, in Australia, the company has signed a deal with an energy company in the state of New South Wales which will see customers save 27% on their bills due to costs coming directly out of their salary. It’s an example of what Thompson calls a huge opportunity to transform the global financial system.
By grouping users through payroll, companies can save on their credit exposure, passing on savings to consumers, with Employment Hero making a cut of the transaction as it aggregates purchasing power.
“It ultimately comes down to credit and risk, if a company is getting paid through a payroll system then the customer isn’t spending money before paying the bill, guaranteeing the incoming and reducing credit exposure,” Thompson said.
“We can look to offer this type of bill streaming to all utilities as well as things like rent, car leases, and mortgages, it’s not something we’ll do as a standalone product but it’s part of a move from payroll into payments.”
Possibilities also include more effective salary advances, unlike many existing options where employees are able to access their wages daily for a fee, Employment Hero wants to speed up the movement of money between employers and employees making it easier for staff to access their earnings on the go. In addition, the company is expanding its app, Swag, which features employment and recruitment platforms, helping SMEs to hire, fill new roles, and duplicate existing ones using Employment Hero’s systems.
The company’s new funding will go towards the business’s expansion plans and building out its tech and marketing in Europe.
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