German tech unicorn Personio, which makes human resources software for small to medium-sized businesses (SMEs), has just raised $270m at a $6.3bn valuation. That makes it Europe’s most valuable private HR tech company.
The funding comes hot on the heels of Personio’s $125m Series D funding in January — bringing the total capital raised by the company to over $500m. The company plans to use the money to launch a new people workflow automation software for SMEs that automates HR processes across departments.
“We’ve been growing 100% year on year in terms of revenue consistently for several years now. We have 5k customers — but there are 1.7m companies across Europe between 10 and 2,000 employees. That means we currently have only 3% market share. There’s so much potential left for us here,” says founder and CEO Hanno Renner.
HR has been a hot sector for investment in Europe as VCs look to back companies building tech for what’s been a traditionally 'analogue' sector and as more companies are looking for tools to manage hybrid teams.
Portugal-based Remote raised a $150m round earlier this year for its platform that helps companies hire and pay employees from anywhere in the world, covering international payroll, taxes and immigration services. Israeli company Papaya Global also raised a $100m Series C in March for its global workforce management services.
In one of the biggest validations for European HR tech so far, Workday bought employee feedback platform Peakon for $700m.
The latest funding round for Personio was led by Greenoaks Capital Partners, with participation from Altimeter and Alkeon Capital. Their combined portfolios already include notable software companies such as UiPath, Hubspot, Stripe and Snowflake.
Personio’s existing investors — Index Ventures, Accel, Meritech, Lightspeed, Northzone and Global Founders Capital — also invested in the round.
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Going ‘beyond HR’
Personio’s cloud-based software helps companies eliminate the paperwork that still dominates personnel management in many SMEs. SMEs use an average of 40+ applications in tasks related to people processes.
The new software helps HR teams streamline processes that are not just limited to their own department but that span the entire organisation.
“We realised when speaking to customers that people processes such as someone getting a promotion or requesting sick leave typically involve using different tools across many different departments,” says Renner.
For example, a business may miss out on talent if a hiring manager is unable to sign off on a contract with a potential employee in time. Or if an employee leaves a company and an IT team cannot quickly revoke their access to applications, the company could be at risk of a data breach.
A growing team
A lot of tech companies complain that hiring talent is a struggle but that doesn’t seem to be a problem at Personio — a mystery that has people in the ecosystem talking.
The company has doubled its employee headcount since the beginning of 2021 and now has over 1k employees across offices in Munich, London, Dublin and Amsterdam.
Renner says the company fielded 60k applications in the last year, but Personio is only able to accept 0.8% of candidates that “go through the funnel.”
The recruitment process is rigorous but this isn’t to be “artificially strict,” says Renner.
“We have a diverse set of people at Personio, but I think it’s the set of values and operating principles which we strictly interview for that combine them. We really only employ people who we think will fit our culture.”
Personio is doubling down on the European market: growing in the countries it’s currently present in and expanding to new ones. But it hasn’t ruled out expanding to other continents in the future.
The company is seeing specifically large demand in the UK and in the Nordics, where a lot of SMEs are still stuck using many tools and applications that lack integration. Personio is already used by SMEs in 80 countries and recently entered the markets of Italy and France.
“We’re also seeing an uptick in organisations that weren’t traditionally customers of Personio — like political parties, NG0s, universities and even football training clubs — which proves the product really is for every organisation,” concludes Renner.
Miriam is Sifted’s Germany correspondent. She tweets from @mparts_.