“A larrikin unicorn”: Culture Amp raises $120 million in Series E funding to surpass $1 billion valuation milestone
Wednesday, September 4, 2019/
Melbourne HR startup Culture Amp has raised $US82 million ($120 million) in Series E funding, crowning it as the latest Aussie-grown unicorn.
The round was led by Sequoia Capital, which itself has been a Culture Amp customer for the past three years.
Existing investors Sapphire Ventures, Felicis Ventures, Index Ventures, Hostplus and Blackbird Ventures also contributed.
Atlassian co-founders Mike Cannon-Brookes and Scott Farquhar also became repeat investors — Cannon-Brookes through his venture fund Grok Ventures, and Farquhar though Skip Capital, the fund he runs with wife Kim Jackson.
The $120 million round makes this one of the biggest raises in Australia so far this year, second only to Judo Bank’s $400 million cash injection in July.
Founded by Didier Elzinga in 2009, Culture Amp provides employee feedback technology to businesses.
It now has some 2,500 customers in 47 countries, offices in Melbourne, San Francisco, New York and London, and 400 staff members globally.
Elzinga tells StartupSmart the startup is still seeing revenues “pretty much doubling” year-on-year.
Earlier this year, Culture Amp acquired performance management company Zugata, in a bid to help organisations act on the insight they receive.
The business has been making “a big push” into development work and improving its offering.
The funding round will allow the startup to make the most out of this momentum, Elzinga says.
“It was an opportunity to really put the foot down and continue investing in this idea of a people and culture platform, rather than just an engagement platform,” he explains.
“The market is good at the moment … there’s a strong appetite for what we’re doing.”
When is a unicorn not a unicorn?
This latest raise brings Culture Amp’s total funding to more than $230 million, and brings the startup’s valuation to $1.04 billion — nudging it tentatively into unicorn territory.
“Technically the definition of a unicorn is $US1 billion,” Elzinga says, suggesting that Culture Amp is perhaps “a larrikin unicorn”.
“Am I proud of that? Sure,” he admits.
However, achieving Aussie unicorn status isn’t the be-all and end-all.
“The amount of money you’ve raised is not a correlation to how successful you’re going to be,” he says.
“Let’s not celebrate raising money, let’s celebrate what we do with it.”
What is more exciting, Elzinga says, is the boost this funding gives the HR tech more broadly, and what it says about corporate values.
“I’m probably more proud of the fact that it’s an indication that people and culture matters,” he explains.
“If a company that’s building software to help improve culture has now grown to be more valuable than many others, that’s a good story,” he adds.
“This is a big bet on the space, not just on us.”
Equally, rather than measuring success in revenues and raises, Elzinga says “the best yardstick of the success of the company” is the staff members.
“The thing I am the most inspired by is that 400 people around the world have chosen to put their shoulder to this wheel,” he explains.
“Together we want to go and find another 1,000 people.”
“The world’s most naive business plan”
This latest funding will support Culture Amp’s growth, bringing the platform and its ethos to more companies around the world.
It may already be in 47 countries, but it’s “only” working with 2,500 companies, Elzinga says.
“There are tens of thousands of companies out there that we want to be working with.”
When he first started out, the founder had “the world’s most naive business plan”, he admits.
The theory was that if he could get tens of thousands of customers, spending tens of thousands of dollars each, that would equal $100 million in revenue.
Now, however, the startup doesn’t measure impact in terms of dollars.
“We measure it in terms of people.”
And the mission isn’t to make $100 million, it’s to improve the working lives of 100 million people.
“That’s approximately 1% of the population,” Elzinga says.
“And that goal is now the focus of the business over the next five to 10 years.”
You’re a nice company, but …
When asked what advice he would offer to earlier-stage startups, Elzinga reflects on some advice he was given himself.
The negative comments you receive along the way will be “innumerable”, he says.
People will tell you your idea won’t work, that the market isn’t big enough, or that you don’t have enough experience.
Elzinga himself was told: “You’re a nice company, but you’ll never grow to anything meaningful.”
“What matters is how many people believe in you, not how many people don’t,” he says.
If nobody you speak to understands your idea, then perhaps that’s telling. But if even three or four people say they would use it, then “it doesn’t matter if 1,000 people think it’s stupid”, he says.
“If everybody thought it was a good idea, somebody would have probably already done it.”
Elzinga has been working on Culture Amp for almost 10 years, and his co-founders came on board about eight years ago. For the first five or six years, they were the only ones who believed in the platform.
It can be hard to deal with, he says.
“Our brains are hard-wired to amplify negative messages.”
The trick is to lean on the people around you for support. And for Elzinga, a lot of this support came from his wife, the psychologist and opera singer Greta Bradman.
In fact, a lot of the inspiration behind Culture Amp came from Bradman.
“She and I were talking about what was going on in the field of psychology,” Elzinga says.
“There are big fundamental shifts in the way we view humans that she opened my eyes up to,” he adds.
“A lot of what Culture Amp was doing was taking those ideas and bringing them into organisations.
“For me, personally, it was having her as somebody who not only encouraged me and supported me, but somebody who I learnt from.”
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