SmartHR, a cloud-based human resources and labor management software startup, has announced a successful $140 million Series E funding round. The round was led by KKR and Teachers’ Ventures Growth, an investment arm of Ontario Teachers’ Pension Plan, with participation from existing investors.
The fresh capital will be used for developing new solutions, hiring, and pursuing organic and inorganic growth strategies, including mergers and acquisitions. SmartHR currently employs around 1,000 people.
This latest funding, which comes three years after SmartHR’s $142.5 million Series D at a $1.6 billion valuation, underscores continued investor interest in technology that enhances staff management efficiency. The company, however, declined to disclose its current valuation.
Founded in 2015 by Kensuke Naito and Shoji Miyata, SmartHR has experienced significant demand for its SaaS platform. This platform aids enterprises in managing and streamlining human resources and operations. As of February 2024, SmartHR’s annual recurring revenue (ARR) reached $100 million, up from $80 million in total revenue for FY 2023.
This growth aligns with the global trend of increasing demand for HR tech solutions. U.S.-based Rippling, SmartHR’s closest comparable company, saw its ARR double to $350 million in 2023. Meanwhile, Gusto, specializing in payroll management, reported over $500 million in revenue by April 2023. Deel, which manages international payroll, surpassed $500 million ARR as of March 2023.
The HR tech market is attracting substantial venture capital, with its value projected to hit $81.84 billion by 2032, according to Fortune Business Insights. Rippling has raised around $2 billion, achieving a valuation of $13.5 billion after a $200 million funding round in April. Gusto has raised nearly $750 million, with a valuation of $9.6 billion, and Deel, valued at $12 billion, has raised $679 million.
Investors are also backing smaller startups tackling various HR challenges. Remofirst, which facilitates global hiring without local offices, recently secured $25 million. Palm, focusing on HR tech in the MENA region, raised $5 million last year. Compa, offering aggregated compensation data for recruiters, landed $10 million in January. Legion, which automates hourly staff management, raised $50 million last month.
In Japan, SmartHR’s competitors include back-office software companies like Works Human Intelligence, freee, and Moneyforward. SmartHR distinguishes itself by acquiring the latest and most accurate employee data through labor management, positioning itself as a central HR system of record. This data allows the company to swiftly introduce new products.