Employment Hero secures $263m in year’s biggest capital raising

Co-founder and chief executive Ben Thompson said Employment Hero could have managed without taking on the fresh funding, but saw it as a strategic win to have TCV at the table, with its impressive track record as a backer of Spotify, Airbnb, ByteDance, LinkedIn and Facebook.Despite the broader malaise in the funding realm, Mr Thompson said he hadnt needed to go hunting or suffer the tougher terms being imposed at less established start-ups.We had a positive experience and received multiple approaches from many exceptional private equity investors we had plenty of competition and achieved favourable terms, no less favourable than previous rounds, Mr Thompson said.That said, we never got caught up with some of the formidable multiples other companies achieved when interest rates were near zero.The valuation vaults Employment Hero into the upper ranks of local VC-backed software companies, being an important portfolio holding for OneVentures, Seek and AirTree.While the market is waiting for Canva to go public and unleash a fortune on the local tech scene, Mr Thompson said an IPO was not even on his and co-founder Dave Tongs radar. We have no reason to be contemplating or working towards an IPO at this time, he said.He said early investors and employees have had plenty of opportunities to realise some of their wealth with secondary sales. OneVentures, for example, sold 55 per cent of its stake to Insight Partners for $55 million in a 2021 funding round.Employment Heros rapid early growth came from its platform used by organisations to manage the administration of new employees. It recently launched an artificial intelligence-based recruitment tool called SmartMatch.It lets small- and medium-sized businesses post job ads for free, rather than charging, like job sites Seek and Indeed.Mr Thompson said he was happy with Swags growth since launch, which has well over 542,000 employer and employee users, more than 360,000 candidate users, and close to 10,000 wallets activated.UK growth is potentially very lucrative, but Mr Thompson is proceeding warily. He said the funding round would let it make a substantial investment to improve its chances.Over the next 12 months, we will double our local presence to a team of 180 to help grow and support the 20,000 UK SMEs we already work with, he said.The UK market is more crowded than most, so we must cut through that noise.TCV general partner Muz Ashraf and partner Alexander Wortmann said they had known Mr Thompson and Mr Tong for several years, and were impressed by their ingenuity, grit, and velocity.Employment Hero is a best-in-class HRIS platform, which is differentiated in offering integrated HR and payroll functionality across multiple geographies, Mr Wortmann said in a statement.