Japan's SmartHR raises $142.5m at $1.6b valuation

Sequoia Capital's global equities business, Whale Rock Capital, Greyhound Capital, and Arena Holdings also participated. They were supported by a JPY20 billion growth vehicle called The Fund, set up by Mizuho Capital and local VC firm Significant, as well as at least two undisclosed investors.

“SmartHR has become the HR database of record for Japanese companies, with commanding market share overall and even more so in enterprise and has strategically expanded the platform across labor management and talent development solutions,” Gaurav Gupta, a partner at Light Street, said in a statement.

“We’ve been thoroughly impressed with the team’s execution and believe it’s still early days – SmartHR has a long runway ahead for growth as more Japanese companies adopt SaaS [software-as-a-service] HR solutions driven by demographic and regulatory tailwinds.”

Founded in 2013, SmartHR automates staff management functions such as payroll and insurance services, while facilitating more frictionless communication between employees with a view to improving productivity. It will use its fresh capital for marketing and to build out its current services offering. There are also plans to branch existing data analytics capabilities into new areas such as strategic decision-making support.

Total funding to date comes to more than $200 million, including a JPY6.1 billion Series C in 2019 featuring Light Street, The Fund, Coral Capital, Beenext Captial, and World Innovation Lab. In 2018, Coral, formerly 500 Startups Japan, raised a special purpose vehicle (SPV) to provide an entire JPY1.5 billion Series B round, marking a growing interest in later-stage deals for the seed investor.

Coral’s SPV was reportedly backed by Tokio Marine & Nichido Fire Insurance and marketing services company Nissen. James Riney, founding partner and CEO of Coral, described the Series D as a symbolic inflection point for both SmartHR and the broader Japanese start-up industry.

“They have essentially set the standard for blitzscaling a SaaS company in Japan,” Riney said in an online post. “Whether it be fundraising momentum, building a top-class management team, scaling an organization and culture, and everything in between, they are truly exceptional.”

SmartHR is one of few technology unicorns in Japan; the total number is often estimated at around five. Among them are Mercari, a flea market app that raised $1.2 billion in the country’s first major tech IPO in 2018, and Sansan, a cloud-based business card digitalization specialist that completed a JPY39 billion IPO a year later.

There is a strong focus on enterprise services in this club, with other players including accounting software provider Freee and payments technology supplier Paidy. Voice recognition developer RevComm, which raised JPY1.5 billion last year, is sometimes counted as a unicorn.

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• Topics
• North Asia
• Support services
• Expansion
• Japan
• Mizuho Capital
• Sequoia Capital
• professional services
• enterprise software