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Australian tech start-up Employer Hero has raised almost $140 million from investors to help fund its UK expansion, facing a tough fundraising market where fast-growing companies struggle to attract investor support.
U.S. private equity firm TCV, whose previous investments include Airbnb and ByteDance, is leading a financing round that values the company at more than $1 billion, according to Jobse co-founder and CEO Ben Thompson.
The money will be used to strengthen the company’s presence in London and expand its British customer base beyond the 20,000 small and medium-sized businesses in the UK that use the company’s software to manage everything from payroll to new hire integration and staff recruitment, Thompson told the Financial Journal Times.
The decision to choose London as its European base is also a stimulus for the efforts of British governments to attract foreign companies in preparation for organizing the Global Investment Summit.
Britain is one of the best places in the world to invest, especially in its thriving technology sector, which is only the third in the world to be valued at $1 trillion, Lord Dominic Johnson, the investment minister, said in a statement. The Job Heros investment is proof of this.
Startups are struggling to raise funds amid a sharp decline in venture capital funding this year.
According to KPMG data, on a global scale, the amount of funds collected by companies from venture capital funds fell by more than half in the first six months of 2023 to USD 163.6 billion.
The KPMG report found that companies that managed to secure financing, including U.S. payments company Stripe and clothing retailer Shein, had to do so at lower valuations than they had previously secured financing.
Founded in 2014 by Thompson, a former lawyer, Job Heros products are used by more than 300,000 businesses in Australia, parts of Asia and Europe.
It also offers an app called Swag that helps employees view pay stubs, find jobs and apply for leave.
The company, which has previously raised funding from backers including US private equity firm Insight Partners, plans to help companies pay their employees in real time, which would reduce their reliance on consumer credit.
Because people get paid in arrears but have to pay in real time, there is a huge discrepancy. The economy works in real time, so why shouldn’t wages work? Thompson said.
Employer Hero is also launching a recruitment platform in the UK that uses an algorithm to match employees using the Swag app with job offers.
“In this case, this capital raise will be very helpful because we want Swag to become a very well-known brand where every employee can create a profile,” Thompson said.
He said the decision to expand into the UK was made in part because of its robust regulatory system compared to a more fragmented market like the US.
From a regulatory point of view [the UK] it’s not like in the U.S., Thompson said. The USA has 50 different states, 50 different labor laws.
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