The list of Australian and New Zealand startups that have made it in Europe is a short one.
But it is a storied one, too. Atlassian, Canva and Xero — worth $50bn, $26bn and $11bn, respectively — demonstrate that breaking Europe is a matter of going big or going home.
Ben Thompson, cofounder of Australia’s Employment Hero, is confident that his HR tech unicorn is ready to join that antipodean pantheon. The company raised €108m in 2022 and €83m in 2021 — from investors including Insight Partners and Salesforce Ventures. Today, it announced a €158m Series F, which brings its valuation to €1.2bn.
Plotting UK expansion
Employment Hero officially launched in the UK market last year, after first expanding into New Zealand, Malaysia and Singapore. It plans to double its London workforce to 180 within a year and build on its existing 20k-strong SME client base in the UK. It wants the UK to be its biggest market within three years.
For Thompson, it is also a case of coming home.
“I spent three years working in London during the dotcom boom in 1999 to 2003. I loved living here, I love the economy, I love the people,” he says.
Employment Hero is not the only HR tech platform in the UK — far from it — but Thompson says that employment management software is only the beginning of what he wants to do in Europe.
By controlling payroll, Employment Hero is also able to control when employees get paid. If someone has worked eight days in a month and they want to be paid for those days on day eight, they can. If they want to be paid daily rather than weekly or monthly, they can.
“If you are switching from paying people every month in arrears to paying them daily and you are the source of payment, through payroll, then you sit at the epicentre of a transformation in how finance works. And that is really valuable,” Thompson says.
Other startups in Europe do offer real-time payments — among them, Wagestream — but Employment Hero has also launched its own payment solution called Instapay, which provides a digital Visa debit card and a spending account within the company's app, called Swag. Employment Hero charges users around £1 to use the card.
It might sound like a payday loan but it is actually the opposite, says Thompson. "Employees are not borrowing money (with an interest rate or late fees) which encourages the cycle of debt," he says.
In Australia, the company has used the collective bargaining power of having several thousand employees on its books to negotiate better rates — from energy companies, for example, with payments coming straight out of employee salaries.
In the UK, the company has partnered with embedded finance company Weavr and is “piggybacking” on its regulatory framework, Thompson says. Employment Hero recently submitted its payroll processing for earned wage access to HMRC and expects to be regulated by the Financial Conduct Authority (FCA) on the payment side of the business.
Thompson wants Employment Hero to use the data it has to launch a recruitment portal, which will use AI to match people with jobs. Once it does that, it can onboard new employees, get them set up with payroll, get them paid and help them spend their money.
If it sounds like Thompson is looking to build the UK’s first superapp, that’s because he is.
“Swag is a superapp. It is one app that helps you find work, manage work, get paid and save,” he says. “Everyone has been waiting for the fintech superapp. Well, weirdly, it has come from an employment platform.”
It sounds ambitious, perhaps overly so, but Muz Ashraf, general partner at TCV — one of the Series F investors — tells Sifted he was convinced to invest given that other HR tech companies have done so well.
But he’s slightly more reticent than Thompson about using the s-word when describing what Employment Hero is trying to do.
“But the superapp concept? I’m not sure. Is it a superapp? It is an employee’s way of managing their employment — that’s how I see it. The primary thing is I get to approve my payroll, view my leave, approve my benefits. I wouldn’t call it a superapp.”
“It is more like an employee’s communication mechanism.”