Darwinbox, an Indian startup that builds a SaaS platform for employment, onboarding and employee management, has raised $140 million to take on Rippling and Deel, which are seeking to expand internationally, especially in the US.
The funds are co-led by KKR and a partner group, with a mix of primary and secondary stock sales, with several unnamed investors selling some of the stocks. Darwinbox’s investors list includes Microsoft, Salesforce, Sequoia, TCV, Peak XV (formerly Sequoia India), Lightspeed, and more.
Darwinbox, which currently raises a total of around $270 million, did not answer questions about the valuation in this latest round, but co-founder Jayant Paleti confirmed to TechCrunch that it is an upround. (The company’s price tag was locked at $950 million when news broke in local news outlets last week.)
In 2022, Darwinbox raised funds at a valuation of over $1 billion.
In some contexts, the two big startups in HR Technology Space (Deal and Rip Ring) are both worth around $12 billion to $13 billion. Other competitors for Darwinbox include Point Solutions providers and dozens of other companies, including large, older incumbents such as SAP, Oracle, and Workday.
The Darwinbox may be smaller than some of its rivals, but it’s a business worth looking at for a number of reasons.
First of all, this is one of the waves of home-based corporate startups that have emerged from India and Southeast Asia in the past few years as the regional technological ecosystem matures and expands beyond e-commerce.
Investors once described this trend to us as “Asia’s Saasization.” Combining the enormous amount of money flowing through it in the region with its massive population, it is clearly a region looking for the next big thing in technology.
The second reason is that this is a prominent example of a company from India, transcending its region and gaining some traction in the coveted US market.
Darwinbox said it has over 1,000 enterprise customers and provides the tools to manage employee management totaling over 3 million people. It covers medium-sized businesses with over 3,000 employees.
Approximately 60% of its revenues now come from outside India, the company said. Paleti, who founded the company with Rohit Chennamaneni and Chaitanya Peddi, told TechCrunch that the US is the company’s fastest growing market. Paleti said he moved to the US in Texas and squared along the occasion there.
The third reason is that Darwinbox takes an all-in-one, ambitious approach to HR.
As Paleti explained, HR is one of the oldest enterprise software categories. So, that means there are many legacy junks that have room for improvement, but that also means that many systems are deeply ingrained. Most startup sales operations involve persuading users that they don’t have enough and ensuring that what Darwinbox has built is excellent.
“When I first started in 2015, it felt almost overwhelming,” he said. “We’re a 3 little band on the corner of Asia and we wanted to build this global company that takes on these legacy players.”
That said, there is an interesting measure of how Darwinbox rocked the arena. When I recently Googled Darwinbox, the first thing I got was the company name, but in fact the link pointed to one of my competitors, Sage. Several other competitors, including Oyster, were also apparently buying placements for Darwinbox searches.
The wider enterprise IT industry is waxing and waning about whether a point solution or platform is the best option for end users, but the startup focus has remained quite idiosyncratic up until now. The aim is to create an end-to-end platform that can be used not only for recruitment and recruitment management, but also for future employees.
Paleti said the next phase of the product is likely to include a significant amount of AI. We believe this is well positioned to be implemented by the company for its platform approach.
“We’re a human resources record system,” he said.
Partner Group, one of the two lead investors in the round, has acquired $75 million in stake in the company in the deal.
The driver said his company has wanted to invest for several years, but only got the opportunity in this latest round. “We see them as one of the few vandals of larger space replacing global majors,” he said.
“We do a lot of due diligence and they’ve been convicted of the right to win.”
Please note that the evaluation details have been updated and are “upround”.
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