Employment Hero Secures $140M AUD Series E Funding

Employment Hero Secures $140 Million AUD in Series E Funding

Just four months following their previous funding announcement, Employment Hero has successfully closed a $140 million AUD (approximately $103 million USD) funding round. This Series E investment was spearheaded by Insight Partners, a venture capital firm recognized for its ScaleUp program designed to accelerate the growth of technology companies.

About Employment Hero

Employment Hero provides an automated platform for managing human resources, payroll, and employee benefits, specifically tailored for small and medium-sized enterprises (SMEs). Established in Sydney in 2014, the company is currently focused on expanding its operations into Southeast Asian and Western European markets.

Their prior funding announcement, a $45 million AUD Series D, occurred in March and was led by the online job platform SEEK. At that time, the company’s valuation stood at approximately $250 million AUD.

The company has experienced significant growth, increasing its valuation to $800 million in under six months, fueled by a 133% year-on-year growth in recurring revenue.

Company Growth and Usage

Co-founded by Ben Thompson, the current chief executive officer, and Dave Tong, the chief technology officer, Employment Hero currently serves 6,000 businesses. These businesses collectively employ a total of 250,000 individuals.

Over the last year, the platform has processed an impressive $14 billion in gross wages.

“We’ve long considered Insight Partners to be an ideal partner,” Thompson stated in an interview with TechCrunch. “Discussions had been ongoing for several years, and when they proposed a fundraising opportunity, we felt it was certainly worth investigating. Ultimately, the timing was right, and we reached an agreement that facilitated continued scaling without necessitating an immediate return to capital-raising activities.”

Expansion and Hiring Plans

Over the past year, Employment Hero’s workforce has grown by 65%, reaching 325 full-time employees. The company has adopted a permanent remote-first work model.

The newly acquired capital will be allocated towards expanding the engineering teams and supporting the company’s ongoing international expansion initiatives.

Employment Hero initiated its expansion into new markets in October 2020, launching localized versions of its platform in New Zealand, the United Kingdom, Malaysia, and Singapore.

Future Market Focus

Thompson indicated that the company will maintain its focus on Malaysia and Singapore through the remainder of the year. Simultaneously, they will explore opportunities to promote SEEK’s products and services within the Asian market.

Following this, plans are in place to localize Employment Hero for Indonesia, Thailand, the Philippines, Hong Kong, and Vietnam.

Localization Strategy

To effectively localize the platform, Employment Hero begins by adapting employment contracts, company policies, leave regulations, and pay structures. Subsequently, they integrate with local tax authorities and pension funds.

The final step involves collaborating with local benefits providers to secure discounted rates on essential expenses for users, such as health insurance and mortgage products.

Adapting to the Pandemic and Remote Work

During the pandemic, Employment Hero’s teams adjusted their strategies to assist companies in adapting to a distributed workforce. This led to the launch of services like Global Teams, a professional employer organization (PEO) solution.

Global Teams connects job openings to over 1,700 career boards and streamlines the onboarding and management of remote employees. The company is also partnering with recruitment agencies to help employers locate remote talent.

Thompson noted that “while still in its early stages, Global Teams has proven to be quite popular,” with dozens of companies across Australia, the United Kingdom, and New Zealand utilizing it to employ individuals in 21 different countries.

Remote Work Trends

Employment Hero’s Remote Work Report, published in June, revealed that 94% of respondents desire to continue working remotely at least one day per week, a significant increase from 2% a year prior.

Furthermore, 74% of employers surveyed indicated their intention to maintain flexible working arrangements even after COVID-19 restrictions are lifted, compared to 64% in 2020.

“Employers are increasingly recognizing remote work as a competitive advantage, as it expands their talent pool and enhances employee retention and engagement,” Thompson explained. “They are now considering how to adapt their practices to support permanent remote work, which requires deliberate planning and education, but is preferable to losing valuable employees by mandating a full return to the office.”

Insight Partners’ Perspective

Rachel Geller, managing director at Insight Partners, stated in a press release, “We have been closely monitoring Employment Hero’s progress for four years and have been impressed by their consistent growth and performance. Their customer-focused solutions have gained widespread acceptance within the small and medium business community, and we are excited to support them in this next phase of their expansion.”