German human resources startup Personio raises $200 million

While many startups struggle to raise additional funds or cut spending, some investors are looking to double down on previous bets. San Fransisco-based venture fund Greenoaks Capital led a new $200 million seed round for HR startup Personio, valuing the company at $8.5 billion.

The unusual preventative investment extends Personio’s $270 million funding round, which builds HR software for European small businesses, raised in October. The deal also signals that multiples for fast-growing startups like Munich-based Personio, which has doubled its revenue since its last round, have eased with public markets. Other European unicorns like Klarna are would have seeking new funding at a third of the $46 billion valuation reached last year.

Personio co-founder and chief executive Hanno Renner said the new funds weren’t necessary, but “piling” cash on the company’s balance sheet would support its growth over the next two to three years. years, as well as new acquisitions. The startup has acquired Returna Berlin-based company that automates common employee questions about time off and payroll, in May.

“We felt that now was the right time with all that was happening to support our balance sheet and to be able to continue to make smart investments over the coming years and be able to make the right decisions for the business. “, says Renner.

Personio charges European small businesses around $190 per month to help automate routine HR tasks like tracking hires, payroll, and performance reviews. That recurring revenue from the six-year-old startup’s 6,000 clients has played a bigger role in conversations with investors since the war in Ukraine sparked a strong sell-off in public markets, and in particular tech stocks, says Renner. .

“What’s really changed there is a lot more focus on fundamentals like sales, sustainability and business efficiency,” says Renner. “We’ve always been strong on that, but people haven’t cared as much about it over the last two years and have always cared about growth.”

Renner says he plans to keep Personio as a private company for the foreseeable future and could make the startup profitable by slowing investment. “We could, if the funding completely ran out, be profitable without major cutbacks simply by not increasing our costs or our headcount,” he says.

The $200 million investment makes Personio one of Germany’s most valuable companies behind process mining software startup Celonis and digital bank N26. “We believe Personio is among the best SaaS companies in the world, with rapid growth, a sustainable business model and exceptional leadership,” says Neil Mehta, founder and managing partner of Greenoaks Capital, who also led the October round. .

Mehta earned a spot on Midas’ list of top tech investors in 2022 thanks to his early backing of South Korean e-commerce giant Coupang and his investments in Stripe, and Robinhood.

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