Israeli human resources management platform HiBob today announced the completion of a $150 million financing round, at a company valuation of $2.45 billion. The company’s valuation has risen from $1.65 billion in its last financing round in October 2021, when it also raised $150 million. The latest financing round brings the total raised by HiBob to $420 million.
While fund raising rounds like HiBob’s, in which a unicorn increases its valuation in a short time were common in 2021, when startups benefitted from cheap money, they have been much rarer in 2022, following the collapse of tech share prices on Wall Street and the rise in interest rates. The contraction of the revenue multiples that venture capital firms are prepared to pay in equity investments has led to a contraction in valuations, when unicorns try to raise money.
Even in the case of HiBob, it is important to stress that this was an ‘internal’ round led by two existing investors – Bessemer Venture Partners and General Atlantic.
HiBob founder and CEO Ronni Zehavi says, “We received two offers from external investors and ultimately from our internal investors, who are great investors and decided they wanted to lead the round.The issue of the valuation is a subjective matter. The company has been consistently growing at a three-digit rate for six years and we can capture an even greater market share. Our multiples were never that crazy and we have had offers in the past to raise money at higher valuations.”
Zehavi declines to reveal HiBob’s current revenue but does share data about efficiency. He says that in 2021, the company burned through $0.70 for every $1 in revenue and it has high net revenue retention of 140%.
He adds, “Just as if you want to catch a wave you have to start surfing a bit before it arrives, so the current financing round will allow us to hire employees and develop our capabilities. When this recession ends in the second half of 2023, we will be in a position to capture a bigger market share.” The company currently has 650 employees.
HiBob was founded in 2015 by Zehavi, CTO Israel David, Amit Knaani and Andy Bellass. The original concept was to focus on pensions in the UK, which at the time was undergoing reform but then the company pivoted to human resources systems and developed software that coordinates information about employees in an organization from their recruitment through to documenting their development and performance and onto organizational surveys about them. HiBob has 2,500 customers and says it adds 350 new customers each quarter.
Emphasis on user interface
HiBob’s software, which is called Bob, has been called the ‘Instagram of HR’ because it emphasizes a carefully developed and intuitive user interface with functions such as writing posts, and timelines that present the development of employees in organizations – far advanced than existing human resources software for organizations. Critics of HiBob’s software say that the interface is at the expense of functions for certain situatrions.
Zehavi says, “In the market for medium-sized enterprises there is no leader and we won’t take it all. I believe that we can come from below and make a difference in the future in the world of corporate software, which is dominated by giant players like SAP and Oracle. It’s a club that no one has entered for years.”
Everyone talks today about profitability. Where are you placed on this?
“I think that any overreaction is not good and so is the stress only on profitability. Even before the crisis we were operating efficiently and we have maintained it, but you can’t aspire to compete with Workaday and Oracle, when you only focus on profitability.
Published by Globes, Israel business news – en.globes.co.il – on August 17, 2022.
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