After closing an $8 million Series B capital raise from industry heavyweights such as SEEK and OneVentures, the founder of Aussie startup Employment Hero recommends other founders always close deals “on your own terms”.
“If you’re considering raising capital, start before you need to,” Employment Hero co-founder Ben Thompson tells StartupSmart.
“If you start looking for money late when you’re desperate to raise cash, the deal isn’t going to be on your own terms. Start looking when you still have options.”
Thompson and his co-founder Dave Tong have had plenty of time to consider their options, with the closure of this $8 million round falling 18 months after the company’s last $4.5 million raise. Many of the same investors from that raise are on board again, with local venture capital firms OneVentures and AirTree joining job boards giant SEEK and AMP Ventures to back the startup.
Employment Hero was founded in 2014 with the aim of making it easier for small to medium size businesses in Australia to employ workers, helping them with things like payroll, employee management, and other various HR tasks.
“SME owners, unlike just about any other profession, don’t get any special training to become an employer. We’re here to help them from the first moment they employ somebody and make it easier for them to manage,” Thompson says.
The startups $4.5 million raise in late 2016 brought on AirTree as a fresh investor, and this $8 million round sees the company buddy up with local jobs company SEEK, something Thompson is particularly excited about.
Although the startup had been in communication with SEEK for a number of years, the two businesses had only been speaking in an investor-investee sense since last September, and Thompson says the partnership is a perfect one to catapult the startup’s growth.
“We manage every part of the employing process, but SEEK sits at the top of the employment funnel, which feeds into everything else. Connecting in with them is a really exciting proposition,” he says.
“We’re really excited about it as it gives us the opportunity to keep growing as aggressively as we have been.”
Employment Hero now boasts around 3000 businesses signed on to the platform, with more than 150,000 employee files under management. Thompson says the startup’s growing 10% compounding month-on-month, with the number of employee details on file growing at a similar amount.
Having gone through the raise process before, Thompson says this time round there was “much less to learn”, but more potential partners to consider. But he views the fact that multiple previous investors came on board again as a significant vote of confidence for him and Employment Hero.
Most of the funds from the raise will be put into hiring talented employees in the startup’s development team, and getting cracking on a number of “exciting” R&D projects Thompson is reticent to speak of.
“We are pleased to support a business that is so well aligned to SEEK’s purpose, which is helping more people live fulfilling and productive working lives and helping organisations succeed,” Ronnie Fink, corporate development director for SEEK, said in a statement.
“We are excited to be part of the growth prospects that lie ahead for Employment Hero.”