Personio – a Munich, Germany-based startup that markets itself as a Workday and ServiceNow targeting the world’s small and medium-sized businesses – went through the Covid-19 pandemic in financial distress after recruiting, payroll, workforce management, development and training, workflow automation and other HR tools were especially adopted by organizations with remote or distributed teams, raising nearly $400 million in one year to meet that demand.
As more companies move parts of their operations back to offices and hybrid environments, Personio is doubling the number. The company has raised an additional $200 million at a new valuation of $8.5 billion, making it one of the most valuable startups in Europe today.
The funding will be used both to grow the customer base – which now numbers 6,000 companies with more than 500,000 employees – and to improve the platform, most notably with more automation tools to improve the way companies run their internal operations.
The funding is technically a second Series E close, following the first $270 million tranche closed in October.
Personio was valued at $6.3 billion at that initial close. Despite the higher prices, Personio is feeling some of the valuation pressures that people have talked and written about, but only rightly so, admitted CEO and co-founder Hanno Renner.
“Since that October raise, we’ve doubled our earnings, but our valuation has only increased by 30%,” he noted.
Greenoaks Capital Partners, who also led the first part of Series E, also led this round, along with other unnamed investors. (Past lenders also include Altimeter Capital, Alkeon, Index Ventures, Accel, Meritech, Lightspeed, Northzone, and Global Founders Capital.)
Renner said this additional financing offer was in reserve in October; it has chosen to exercise it now, partly because of the investment climate – you don’t know what might be around the corner – and partly because it is eager to invest while continuing to see more growth opportunities.
The premise of Personio is that the software is tailored to SMEs and how they are most likely to use software, with options for self-service integration and without the need for dedicated staff to support it.
It initially made a name for itself with a tight offering of recruiting, onboarding and basic HR management tools.
But as SMBs have grown in their IT aspirations, so has Personio: The company has added third-party app integrations (now 100), and last year the company began expanding into workflow automation to run task management and approval processes. , electronic signatures and other productivity tools.
That has also led the company to make a few acquisitions to expand that set, most notably acquiring another German startup called Back to improve and automate the way teams manage ticketing and knowledge management internally.
While Renner said the company will likely continue to add more functionality to its platform, although it is being approached by larger companies looking to use its software, Personio is unlikely to change its target customer size from 10 to 2,000 employees.
“We see that the needs of small and medium-sized businesses are very different from those of enterprises, and the solutions they need are also different,” Renner said. “It’s not just the money they’re willing to spend on IT, but the investments people make around it. Enterprise solutions require a dedicated staff who does nothing but implement and run a tool. We’ll be in in a few weeks and don’t need any additional resources to run it. These kinds of solutions are just very different.”
The company’s tools may have come in handy during the pandemic, when companies that had previously performed operations in person suddenly needed more digital tools to keep people connected, but while people will likely return to physical offices more, it is unlikely that once HR functions have gone digital, they will also return in person.
And while there are dozens, maybe hundreds of competitors in this space — including companies like HiBob who also have ambitions to cover HR end-to-end, as well as numerous point solutions — Personio’s traction and the general trends of the market pin represent a prime opportunity for investors.
“Personio’s product has become an indispensable tool for Europe’s small and medium-sized businesses as they have recovered from the challenges of the pandemic,” said Neil Mehta, founder and managing partner of Greenoaks Capital, in a statement. “As SMBs face the possibility of economic uncertainty in the future, Personio is a more important platform than ever, helping clients make their HR and payroll processes more efficient and resilient, while keeping both employees and employers happy. We believe Personio is one of the best SaaS companies in the world, with rapid growth, a sustainable business model and exceptional leadership. We are delighted to be working with Hanno and his team again and look forward to continuing our journey for many years to come.”