HR startup Rippling raises $500 million in fresh funding after SVB collapse
By Krystal Hu and Niket Nishant
(Reuters) – HR and payments software startup Rippling announced on Friday that it has raised $500 million in a new round of funding originally intended to help customers with payroll in the wake of the Silicon Valley bank collapse help.
The round, led by tech investor Greenoaks Capital, gave Rippling the same $11.25 billion valuation it achieved after its previous capital raise last year, the company said. After Rippling Chief Executive Parker Conrad learned that some of his clients’ payroll funds were stuck at SVB last Friday, he decided to use $130 million from the San Francisco-based company’s own balance sheet to ensure payrolls were processed on time became.
Unclear if customer funds would be recovered by Monday, Conrad began seeking more capital from investors whose funds were also partially stuck with SVB.
Assembled in 24 hours, this fundraiser highlighted how the tech ecosystem, from startups to investors, was deeply unsettled by the surprise and rapid collapse of Silicon Valley Bank, formerly a unit of SVB Financial.
Growth stock firm Greenoaks was one of Rippling’s investors with funds available for remittance on Monday. The two agreed to maintain Rippling’s valuation starting in May 2022 in a rare flat round, when valuations of late-stage companies fell amid higher interest rates.
“We were planning on raising money either later this year or early next year. We brought it forward by about a year and it will reduce any risk we have of what happens to the SVB on Monday. It’s a little dilution for the companies,” Conrad said.
When the U.S. Federal Deposit Insurance Corporation (FDIC) guaranteed all of the bank’s depositors access to their money on Sunday afternoon, Rippling and Greenoaks decided to proceed with the funding, even though Rippling no longer needs the funds to cover its customers’ paychecks.
Conrad, who is sitting on more than $1 billion in cash, said he hopes this will be the company’s last private equity raise, adding that the not-yet-profitable company has no concrete plans to go public. It also moved its banking partner from SVB to JPMorgan Chase.
Rippling provides services to companies to manage their HR and IT operations, such as: B. Onboarding employees and managing payroll. It said it generates over $100 million in annual recurring revenue, growing at over 100% annually, and serves over 400,000 users across industries from retail to healthcare.
Conrad said the company will continue to invest in R&D and product development.
“This capital will further insulate us from anything that might happen in the macro economy over the next year and allow us to continue investing to continue creating great products for our customers,” said Conrad.
(Reporting by Krystal Hu in San Francisco and by Niket Nishant in Bengaluru; Editing by Shounak Dasgupta, Nick Zieminski and Richard Chang)