Employment Hero co-founders Ben Thompson and Dave Tong. Image Credits: Employment Hero
Four months after announcing its last round, Employment Hero has closed another $140 million AUD (about $103 million USD) in funding. The Series E was led by Insight Partners, the venture capital firm known for its ScaleUp program to help tech companies accelerate their growth.
Employment Hero is an automated human resources, payroll and benefits platform for SMEs. Founded in Sydney in 2014, the company is now expanding into Southeast Asian and Western European markets. Its previous funding announcement was a $45 million AUD Series D announced in March, led by online job platform SEEK, at the company's previous valuation of about $250 million AUD.
Now Employment Hero has bumped up its valuation $800 million in less than six months by reaching 133% year-on- recurring revenue growth. Co-founded by Ben Thompson, its chief executive officer, and chief technology officer Dave Tong, Employment Hero is used by 6,000 businesses, with a total of 250,000 employees. Over the past 12 months, the company says $14 billion in gross wages was processed through the platform.
“We always thought Insight Partners would be a great partner,” Thompson told TechCrunch. “We had been speaking with them for years, so when they asked if we would consider raising, we agreed it was definitely worth exploring. As it turned out all the stars were aligned, and we reached a deal that made sense and allowed us to keep scaling without having to switch back into capital-raising mode.”
Over the past year, Employment Hero grew its headcount by 65% to 325 full-time employees and now has a permanent remote-first work model. The new capital will be used to hire for its engineering teams and for the company’s continuing international expansion.
Employment Hero began entering new markets in October 2020, launching localized versions of the platform in New Zealand, the United Kingdom, Malaysia and Singapore.
Thompson said Employment Hero will continue focusing on Malaysia and Singapore until the end of this year, while looking at ways to cross-promote SEEK’s products and services in Asia. After that, it plans to localize Employment Hero for Indonesia, Thailand, the Philippines, Hong Kong and Vietnam.
To localize the platform, Employment Hero starts with employment contracts, policies, leave rules and pay rules. Then it integrates with tax authorities and pension funds, before focusing on local benefits providers to get discounts on nondiscretionary expenses for users, like health insurance and mortgages.
During the pandemic, Thompson said Employment Hero’s teams shifted their focus to help companies adapt to a distributed workforce. Some of the services it launched include Global Teams, a professional employer organization (PEO) solution that pushes job openings to more than 1,700 career boards and helps companies onboard and manage remote workers. Employment Hero is also working with recruitment agencies that will help employers find remote workers.
Thompson said, “while it’s still early days for Global Teams, it’s definitely popular,” with dozens of companies in Australia, the United Kingdom and New Zealand using it to employ people in 21 countries.
Employment Hero’s Remote Work Report, released in June, found that 94% of respondents want to continue working remotely at least one day a week, up from 2% a year ago. Meanwhile, 74% of employers surveyed told Employment Hero that they plan to keep flexible working arrangements after COVID restrictions are lifted, up from 64% in 2020.
“We are seeing employers embrace remote work as a competitive advantage because it broadens their available talent pool and helps retain and engage their employees,” Thompson said. “Employers are now asking, how should we do things differently if we want to continue working remotely forever? This requires real intention and education, but it’s a whole lot better than losing great employees by forcing them back to the office five days a week.”
In a statement about the investment, Insight Partners managing director Rachel Geller said, “We have been following Employment Hero’s journey for four years and have seen the impressive and consistent growth experience by the company. Its customer-centric solutions have been embraced globally by the small and medium business community and we are looking forward to supporting them through this next phase of their expansion journey.”