Darwinbox, one of Asia’s fastest-growing enterprise software startups, said on January 25, 2022 that it has raised $72 million led by US-based investment firm Technology Crossover Ventures (TCV). Netflix backer TCV’s push has catapulted Darwinbox into the coveted unicorn club with a valuation of over $1 billion.
Darwinbox, founded by Jayant Paleti, Rohit Chennamaneni and Chaitanya Peddi in 2015, works in the HR-tech space, digitizing functions such as attendance, payroll and employee onboarding. Its other investors include Sequoia, Lightspeed India and Salesforce Ventures.
The company is sensing opportunities in Southeast Asia and looking to challenge the dominance of global human capital management (HCM) giants such as Oracle, SAP, and Workday. Paleti is now based out of Singapore, and the company is making key leadership additions there.
The homegrown Hyderabad-based startup’s Annual Recurring Revenue (ARR) has doubled to about $30 million year-on-year, a source aware of the matter requesting anonymity, but the company declined to comment. It is also one of the only Indian software unicorns whose revenue is mainly from India and not the US.
At over 30 times revenue, its valuation represents the upper end of software valuations, signaling investor aggression, although global software stocks, including newly listed Freshworks, have fallen recently.
The funding will fuel Darwinbox’s global expansion
The new funding, which comes exactly a year after it raised $15 million in an investment round led by Salesforce Ventures, will help Darwinbox drive its global expansion, accelerate platform innovation and ramp up its product, engineering, and customer success teams as it seeks to boost its presence in South Asia, Southeast Asia, as well as the Middle East and North Africa.
So far, the company has raised more than $110 million and counts Sequoia India, Lightspeed India, and Endiya Partners among its investors, which also participated in the latest funding round.
“This investment energizes our mission to continue building technology that enables organizations to unlock the highest potential of their people,” said Jayant Paleti, co-founder, Darwinbox, in a statement.
“We have done this by building a product that puts employees squarely at the center and crafting meaningful experiences for them. This has especially found resonance in this rapidly evolving world of work over the last two years with companies having to rethink how they attract, manage and retain their talent,” added Paleti.
The startup would continue to invest in new and innovative technology
Darwinbox’s cloud-based HCM platform caters to HR needs across the employee lifecycle. Their new-age product is powering digital HR for more than 1.5 million employees from over 650 enterprises across the globe.
“Even if valuation multiples are high, we will comfortably grow into it with half the money we have raised. So the market isn’t that worrying. The focus is to become the market leader in India in 18 months and SouthEast Asia and the Middle East after that. Then an IPO is a next step,” co-founder Rohit Chennamaneni said in an interview.
“People laughed at us when we said that we are going after a market where (giants) SAP and Oracle dominate. But Asia’s time to buy SaaS has come, and the big opportunity is to move from on-premise systems to the cloud. Today the US is an option in addition to everything else, not the center of our plans (unlike most other SaaS companies),” he added.
Darwinbox’s customers include conglomerates such as Adani, Vedanta and JSW, and newer internet companies such as Cars24, Vedantu and CRED.
Similar to other technology companies, Darwinbox also benefitted from the COVID-19 pandemic, which turbocharged digital adoption across sectors, and brought millions of new users to the market from industries such as real estate, manufacturing and healthcare (hospitals).
