In a move that underscores the rapid growth and increasing valuations of late-stage HR tech startups, Rippling is raising new capital. According to sources familiar with the deal, the company’s latest round would inject $200 million into Rippling, while existing stockholders would sell another $670 million worth of shares.
Valuation Could Reach $13.4 Billion
This new funding round, which has not yet closed, is set to be Rippling’s Series F. As a result, the company’s valuation could reach as high as $13.4 billion on a post-money basis, up from its previous valuation of $11.25 billion when it last raised capital in a $500 million Series E just a year ago.
Rippling had already raised an impressive $1.2 billion prior to this round, highlighting the company’s rapid growth and increasing attractiveness to investors.
Coatue Leads the Round; Founders Fund Invests Heavily
The new funding round is being led by Coatue, with existing investor Napoleon Ta at Founders Fund prepared to invest up to another $310 million. This would be the largest check that Founders Fund has ever written for a single company’s round.
However, it remains unclear how much of this cash will go towards purchasing shares in Rippling and how much will be used to buy shares from other investors. It is worth noting that existing investor Greenoaks is also participating in the round.
HR Tech Market Continues to Grow
Rippling’s decision to raise more capital in a year is not unexpected, given the size and growth of the HR tech market for payroll services and remote labor management. The market features a range of well-funded late-stage startups, including competitors Gusto and Deel.
Gusto recently reached $500 million in trailing revenue last year, while also achieving cash-flow positivity. Earlier this year, Deel said it had reached $500 million worth of annual recurring revenue.
Rippling’s Aggressive Expansion Plans
Meanwhile, Rippling is aggressively expanding its operations. According to a report by the San Francisco Chronicle, the company recently signed a 123,000-square-foot lease for a new San Francisco headquarters, quadrupling its office space. The lease is the city’s second-largest of the year.
Tremendous Amount of Venture Capital in HR Tech
The amount of venture capital pouring into HR tech today is staggering. With Gusto worth around $9.5 billion, Deel at $12 billion, and Rippling now potentially reaching $13.4 billion, there’s a vast amount of founder and employee equity tied up in the space.
New companies are also emerging, with Remofirst recently raising $25 million to continue working on its low-cost hiring product that competes with many of the companies listed above.
Large Secondary Transactions Gain Popularity
In addition, existing shareholders – whether employees or investors – are looking to sell stakes in private companies to gain liquidity. Large secondary transactions have become increasingly popular, with several high-profile deals announced in recent months.
By maintaining its aggressive expansion plans and continued growth, Rippling is solidifying its position as a leader in the HR tech market.
