Australia-based Employment Hero has closed a Series A funding worth $2.2 million in a round led by venture capital (VC) firm OneVentures. It was joined by AMP New Ventures, the corporate venture capital (VC) arm of financial services firm AMP Limited. led by former lead principal of Singtel Innov8, Alfred Lo.
The Sydney-based startup has online human resources (HR) software that melds functions like payroll, employee benefits and retirement, employment contracts, accounting and more – into a single web application. Currently, the firm operates on a freemium model.
Employees of enterprises that use the platform are able to access a services marketplace for various benefits like health and insurance, mobile phone plans, gym membership discounts, as well as an array of assorted services.
Commenting on the investment, OneVentures CEO Michelle Deaker said, “The human resources marketplace is poised for significant growth in the next 10 years. The Australian market alone is worth in excess of $500 million with payroll $2 billion and financial services and mortgage commissions in excess of $7 billion.
“Companies around the world are increasing their investment in HR infrastructure with spend in excess of $100 billion per annum and including other benefits potentially up to $1 trillion,” Deaker added.
The benefits that Employment Hero is able to provide to its customers have enabled through corporate partnerships. Corporations are able to access a free version, or pay A$3 per employee under the premium service model.
Corporate users can access services that manage the on-boarding of employees, employment contract, rostering, timesheet, superannuation provisioning, payroll and also integrates with major accounting companies.
In an interaction with startup news publication StartupSmart, CEO Ben Thompson shared: “We wanted to prove the model first, and we started with an experiment in July last year. We wanted to pass 20,000 employees on the platform and we’re now at 35,000.”
“We wanted to prove that we could make as much money through the marketplace as we would with a subscription model.Once we’d proven the model we decided to scale it, and that gave us the motivation to do a capital raise,” he added.
Proceeds from the Series A investment will see the Australian venture add more features to its product, in addition to expanding its geographic reach beyond Australia to near markets like Southeast Asia and key global markets like the United Kingdom (UK), which has a potential market of 20 million employees. It reportedly plans to expand to the UK by the end of 2016.
Despite this, in statements to the media, Thomson, a registered solicitor and barrister with the New South Wales Law Society, said, “In the UK they have also introduced auto enrolments for all employees into a superannuation plan … which is what we’ve been very successful at managing here. We want to help the UK, Australia and New Zealand to digitise HR with a modern platform business model.”
The startup, which was founded in 2013, reported this as its first round of external funding. Since 2013, it has been self-financed. In an official statement, Thompson commented: “We want to help [businesses] grow, reduce administration, [and] hire and retain talented employees, and to help employees get access to a marketplace of superfunds, health insurers, mortgages, and other benefits.”
To date, Employment Hero has registered 35,000 employees and 500 employers from Australia as users, with a client base that includes online retailer Kogan, cosmetics and beauty products company ModelCo, and graphic design tools startup Canva.