This HR Tech Platform Secures Nearly PHP 600 Million in Funding
The latest round of funding brings its total investment to PHP 1.024 billion. What’s more, some of the investors are investing in a Philippine-based company for the first time.
Sprout Solutions, a human resource (HR) technology platform based here in the Philippines, has successfully secured $10.7 million (almost PHP 600 million) in Series B funding. This latest round of funding brings the total investment in the company—as of writing—to $18.3 Million (approximately PHP 1.024 billion).
Its Series A funding round took place in 2019—four years after the company’s inception. Sprout has since acquired Linnia, an AI and process automation platform.
Sprout Solutions describes itself as “the leading homegrown HR tech company in the Philippines” that “offers HR and Payroll applications and integrated solutions that streamline recruitment, employee engagement, and performance management processes.” It is expected to cross $10 million (approximately PHP 599 million) in annual recurring revenue (ARR) in the second quarter of 2023.
What is Series A and B Funding?
Businesses can get funding from many different avenues, like founders, family, friends, venture capitalists, and angel investors. This initial investment is called seed funding—wherein cash investments are “generally used to carry out the business strategy of the startup and designed to grow the company.” The cash raised during a seed round can differ, depending on the scale of the opportunity and the experience that the business owners have.
Seed funding is then followed by various rounds: Series A, B, and C. Usually, a new valuation is done during each funding round, which is “determined by various factors, including market size, company potential, current revenues, and management.“
Series A follows the initial seed funding and usually takes place once the company has refined its business model. At this point, investors aren’t looking for a “good idea” anymore—they want a strong strategy and a growth plan that will produce profits.
Meanwhile, Series B is the next level. While seed funding and Series A are used to establish the company and secure market shares, Series B funding is used to scale and grow the business. Usually, the funds there are used for business development, advertising, marketing, and expanding the workforce.
Who Invested in Sprout Solutions?
According to Sprout Solutions, it received funding from seven global venture capital firms with Cercano Management leading the round. Other firms that participated in the funding are as follows:
- ACA Investments
- AFG Partners
- GSR Ventures
- Integra Partners
- Mynavi Corporation
- SoftBank Ventures Asia
The company likewise notes that this is the first time that ACA Investments, Cercano Management, GSR Ventures, Mynavi Corporation, and SoftBank Ventures Asia are investing in a Philippine-based company.
HR Tech Industry Numbers and Trends
Described by Statista as a “fast-growing field,” HR technology has an estimated annual revenue of $62.6 billion (approximately PHP 3.50 trillion) in 2022. This number is predicted to increase by 2026 to $91.8 billion (approximately PHP 5.14 trillion).
As the industry grows, so do the trends in HR technology that companies and entrepreneurs can look into, especially given the effects of the COVID-19 pandemic. According to the United States Chamber of Commerce, one of the HR technology trends for 2023 that can be explored is investing in the metaverse. The US Chamber of Commerce points out that “by 2026, 25% of people will spend at least one hour a day in the metaverse.”
“This alternate reality can change the way employees view the role of their HR departments,” it explains. “By investing in the metaverse, companies will ensure they’re keeping up with the latest technology and trends, which will trickle down to employees.”
Another trend that can be explored this year is tech-enabled employee self-service. “For instance, if they want to schedule time off, view pay stubs, or sign up for benefits, they should be able to do so in one central location,” the US Chamber of Commerce points out.