Darwinbox Raises $140M to Compete with Deel and Rippling

Darwinbox Secures $140 Million to Challenge HR Tech Leaders

Darwinbox, an Indian-origin startup specializing in a SaaS platform for workforce management – encompassing hiring, onboarding, and employee administration – has successfully raised $140 million in funding. This investment aims to facilitate its expansion, particularly within the U.S. market, and directly compete with established players like Rippling and Deel.

Funding Details and Investor Base

The funding round was jointly led by KKR and Partners Group, incorporating both primary investment and secondary share sales. Existing stakeholders participated, with several unnamed investors reducing their holdings. Darwinbox boasts a robust investor portfolio including Microsoft, Salesforce, Sequoia, TCV, Peak XV (previously Sequoia India), and Lightspeed.

Previously, Darwinbox had secured $130 million in prior funding rounds. Co-founder Jayant Paleti confirmed to TechCrunch that this latest round represents an increase in valuation. Initial reports suggesting a $950 million valuation have been surpassed.

Valuation and Competitive Landscape

In 2022, Darwinbox achieved a valuation exceeding $1 billion. Key competitors in the HR technology sector, such as Deel and Rippling, are currently valued between $12 billion and $13 billion. Darwinbox also faces competition from specialized solution providers and established industry giants like SAP, Oracle, and Workday.

Reasons for Watchfulness

Despite being relatively smaller than some competitors, Darwinbox presents several compelling reasons for industry observation.

The Rise of Asian SaaS

Darwinbox exemplifies the growing trend of enterprise startups emerging from India and Southeast Asia. This surge is fueled by the maturation of the region’s technology ecosystem, extending beyond its initial focus on e-commerce. An investor characterized this development as “the SaaS-ification of Asia.”

The combination of substantial financial inflows and a large population base positions the region as a key area for future technological innovation.

U.S. Market Traction

This funding signifies a significant achievement for an Indian company successfully gaining momentum in the highly competitive U.S. market. Darwinbox currently serves over 1,000 enterprise clients, managing employee data for more than 3 million individuals.

Target Market and Revenue Growth

The company focuses on mid-market organizations with 3,000 or more employees. Currently, approximately 60% of Darwinbox’s revenue originates from outside of India, with the U.S. representing its fastest-growing market. To capitalize on this opportunity, co-founder Paleti has relocated to Texas, and the company has shifted its headquarters to Singapore.

An All-in-One HR Solution

Darwinbox adopts a comprehensive, ambitious strategy for HR management.

As Paleti explained, the HR software category is well-established, presenting both opportunities for improvement and challenges related to ingrained legacy systems. A significant portion of the company’s sales efforts involve demonstrating the superiority of its platform over existing solutions.

“In 2015, the task seemed daunting,” Paleti stated. “As a small team in Asia, we aimed to challenge established industry leaders globally.”

Market Recognition

An interesting indicator of Darwinbox’s growing influence is its search engine visibility. A recent Google search for “Darwinbox” initially directed users to a competitor, Sage, and other competitors were actively purchasing ad placements targeting searches for Darwinbox.

Platform Approach to HR

Unlike some competitors focusing on point solutions, Darwinbox is dedicated to building an end-to-end platform. This platform supports the entire employee lifecycle, from recruitment and onboarding to ongoing administration – including expenses, time off, payroll, and more.

Future Focus on Artificial Intelligence

Paleti anticipates that the next phase of product development will heavily incorporate artificial intelligence (AI). He believes the company’s platform approach uniquely positions it to leverage AI effectively, powering services holistically.

“We function as the central record for HR information,” he emphasized.

Partners Group Investment

Partners Group is investing $75 million in this round, as stated by Cyrus Driver, its Managing Director for private equity. Driver explained that his firm had been considering an investment for several years, but the opportunity materialized with this latest funding round.

“We recognize them as a key disruptor challenging major global players,” Driver noted, highlighting the company’s ability to adapt its product to different markets as a significant strength. He added, “Our due diligence confirmed their strong potential for success.”

This article has been updated to reflect the confirmed valuation as an “up round” and to include the total amount of funding raised, accounting for secondary sales.