Japanese HR Tech Leader SmartHR Raises $140M in Series E Round

SmartHR, a cloud-based human resources and labor management software startup, has announced securing $140 million in a Series E funding round on July 1, 2024. The round was led by KKR and Teachers’ Ventures Growth (TGV), the late-stage venture and growth investment arm of Ontario Teachers’ Pension Plan, with participation from existing investors.

This new funding comes three years after SmartHR raised $142.5 million in a Series D round at a valuation of $1.6 billion. Investors have shown continued interest in technology that helps companies manage their workforce more efficiently for a broader trend in the HR tech industry. The previous round included investors like Light Street Capital, Sequoia Capital Global Equities, and Whole Rock. At that time, SmartHR was valued at $1.6 billion, with its status as an HR tech unicorn.

The Series E funding is part of KKR’s Asia Next Generation Tech strategy, which has recently included investments in other Japanese companies such as Yayoi, dataX, and NetStars. 

SmartHR, founded in 2013 and launched its software in 2015, supports over 60,000 companies across various industries, including Nissin Holdings, NTT Data, Mediclude, and JFE. The company’s annual recurring revenue reached $100 million in February 2024, up from $80 million in total revenue for FY 2023. The new funding will help develop new solutions, expand hiring, and pursue growth strategies, including potential mergers and acquisitions.

KKR Partner and Head of Growth Equity for Asia Pacific, Mukul Chawla, emphasized SmartHR’s role in boosting workforce productivity in Japan amid increasing digitalization and cloud adoption. The company’s ARR growth has shown a broader trend in the HR tech industry, with similar US-based companies like Rippling, Gusto, and Deel also experiencing revenue increases. Chawla also noted the company’s role in Japan’s evolving digital economy and showed support for the company’s growth in the industry. 

Olivia Steedman, Executive Managing Director and Global Head of TCG highlighted SmartHR’s innovative approaches to workforce management, emphasizing its potential to aid Japanese companies in their digital transformation. Both KKR and TCG plan to leverage their global expertise to support SmartHR’s next growth phase.

The HR tech market is thriving, with projections estimating its value at $81.84 billion by 2032. Major industry players like Rippling, Gusto, and Deel have collectively raised large venture capital with strong investor confidence in this sector. Smaller startups are also attracting notable investments, tackling various aspects of traditional HR processes. 

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