As many startups struggle to raise additional funds or cut back on spending, some investors are looking to double down on earlier bets. San Francisco-based venture fund Greenoaks Capital has led a new $200 million round for HR startup Personio valuing the company at $8.5 billion.
The unusual pre-emptive investment extends the $270 million Series E round Personio, which builds HR software for small European companies, raised in October. The deal also signals that the multiples for fast-growing startups like Munich-based Personio, which doubled its revenues since its last round, have softened along with public markets. Other European unicorns like Klarna are reportedly seeking new funds at a third of the $46 billion valuation it hit last year.
Personio co-founder and chief executive Hanno Renner says the new funds were not needed but “piling” money on the company’s balance sheet would support its growth over the next two to three years, and new acquisitions. The startup acquired Back, a Berlin-based company that automates common employee questions about leave, and payroll, in May.
“We had the feeling that now was a good time with everything going on to prop up our balance sheet and be able to continue to make sensible investments over the coming years and be able to make the right decisions for the business,” says Renner.
Personio charges small European companies around $190 a month to help automate routine HR tasks like tracking hiring, payroll, and performance reviews. That recurring revenue from six-year-old startup’s 6,000 customer had played a bigger part in conversations with investors since the war in Ukraine sparked a sharp sell-off in public markets, and particularly tech stocks, says Renner.
“What really changed there was much more focus on the fundamentals like sales, sustainability, and the efficiency of the business,” says Renner. “We were always strong on that but people didn’t care as much in the last couple of years and always cared about growth.”
Renner says that he plans to keep Personio as a private company for the foreseeable future, and could make the startup profitable by slowing investments. “We could if funding completely dried up be profitable without any major cuts just by not increasing our costs, or headcount,” he says.
The $200 million investment marks Personio as 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 the Midas List of top tech investors in 2022 thanks to being an early backer of South Korean e-commerce giant Coupang, and investments in Stripe, Checkout.com, and Robinhood.