There is considerable angst out there among startups, especially those running short on runway. Will they be able to raise the next round? Well, if a company has proven legs, or a highly bankable founder, the answer appears to be yes. For now at least. Companies that are able to raise money now don’t seem to be thinking twice about doing so.
Yesterday we wrote about an example of the latter. Wonder, a foodtech startup that cooks celeb chef food in roving vans, closed a $350 million round led by Bain Capital. The bankable founder is none other than Marc Lore. He is the owner of the Minnesota Timberwolves and a proven, serial entrepreneur. It’s hard to see a newcomer raising that kind of capital in this environment. Especially for an idea that is arguable a little bonkers.
The former example, announced today, is Personio. Founded in 2015, this Munich-based company provides HR software to SMBs. According to its website, Personio’s software is all about freeing up HR teams to do higher-value work. “We automate people processes and free up time for more strategic work, enabling HR to go beyond HR.”
It has raised a $200 million Series E round at an $8.5 billion valuation. This round nearly doubles Personio’s cumulative fundraising to $470 million. When we last covered Personio in early 2021 the company’s valuation was $1.7 billion.
The company has 6,000 customers with 500,000 total employees. It targets businesses with between 10 and 2,000 employees. However, the company says it sees its biggest growth opportunity in the 200 to 2,000 employee range. Definitely the “M” in SMB.
Raise it While You Can
Personio plans to use the funds to invest in its product, according to Co-founder and CEO Hanno Renner. But this also feels like a case of taking the money when it’s available. After all, you might need it later.
In May, San Francisco-based Gusto, also in the HR space, did something similar. It raised a roughly $55 million extension to its $175 million Series E. Presumably this was done to accumulate more dry powder. Gusto is valued at about $10 billion.
“We decided to raise the additional capital because we saw so many more ways to invest in our product that will increase the value we can provide,” Renner said. “Those expansions will all be embedded into People Workflow Automation, which allows customers to automate workflows based on events in the employee lifecycle, from promotions and location changes to holiday requests.”
Existing Personio investor Greenoaks Capital is leading the E round. This represents a key vote of confidence. This is especially true in a tight venture funding environment.
Greenoaks’ managing partner said his firm is doubling down on Personio because the company can help SMBs navigate the anticipated economic downturn.
“Personio’s product has become an indispensable tool for Europe’s small and medium-sized businesses as they’ve bounced back from the challenges of the pandemic,” said Neil Mehta, Founder and Managing Partner of Greenoaks Capital. “As SMEs face the possibility of economic uncertainty ahead, Personio is a more critical platform than ever.”
