Recent changes in work patterns and locations have prompted businesses to re-evaluate their employee management strategies and the technologies they employ. Today, a company developing solutions to address these evolving needs is announcing a significant funding achievement that highlights its progress.

Personio — a German company focused on providing an all-in-one HR platform for small- and medium-sized businesses (companies with 10 to 2,000 employees) — has secured $125 million in funding, resulting in a post-money valuation of $1.7 billion. The platform encompasses essential HR functions such as recruitment, onboarding, payroll, and absence management.

This Series D funding round is jointly led by Index Ventures and Meritech, with participation from existing investors including Accel, Lightspeed Venture Partners, Northzone, Global Founders Capital, and Picus.

The $1.7 billion valuation represents substantial growth compared to the company’s $500 million valuation from the previous year. This increase follows a period of doubled revenue for the startup, achieved without actively seeking additional funding, as previous investments remained available.

Currently, Personio serves approximately 3,000 SMEs throughout Europe.

According to Hanno Renner, co-founder and CEO of Personio, the new funding will be allocated to further product development – aiming for functionality similar to Workday, but specifically designed for smaller organizations – and to expand the company’s European reach.

Renner noted that despite the traditional challenges of serving the SME market, a new opportunity has emerged. An increasing number of businesses in this sector are recognizing the benefits of a modern, integrated HR platform.

“We launched Personio in 2016 with the goal of becoming the leading HR platform for mid-sized companies, and we always believed in its potential,” Renner stated. “However, we’ve come to understand that HR is not simply an important function, but potentially the most critical aspect of any business.”

He suggested that a single key feature can attract new users, such as providing tools for remote recruitment, contract signing, and employee onboarding. He also acknowledged that the mid-market, particularly companies not initially built around technology, has been slow to adopt new solutions, with many still relying on Excel spreadsheets or even manual, paper-based processes. “Facilitating their digitization in a more effective manner is a key driver of our growth.”

Personio is not alone in anticipating that the changing work landscape will increase demand for HR tools. Companies like Hibob have also experienced significant growth and are actively seeking funding to capitalize on this trend.

Hibob is concentrating on incorporating more training resources, highlighting the competitive drive to enhance feature sets that Personio will also need to address.

Considering the substantial number of SMBs in the European market – exceeding 25 million and representing over 99% of all enterprises, according to European Union data – the fact that many have yet to implement any HR platform indicates considerable potential for growth among various companies.

“SMEs are vital to the European economy, providing employment for 100 million people across the continent, yet this sector has often been overlooked by software companies that prioritize larger enterprises,” explained Martin Mignot, a partner at Index and a member of Personio’s board, in a released statement. “Personio is changing this by offering a powerful suite of tools specifically designed to meet the needs of small businesses.”

“We’ve had the opportunity to collaborate with some of the most successful SaaS businesses globally, and given Personio’s achievements over the past five years and the significant market opportunity, we are confident in its ability to build an equally successful and impactful company,” added Alex Clayton, general partner at Meritech Capital, in a separate statement. “Following extensive discussions with Hanno, we are pleased to join their journey.” Clayton will also be joining the board as part of this funding round.