Germany-based Personio announced a $270 million Series E Round of venture capital with a $6.3 billion valuation. This brings its total raised to $524 million. The round was led by Greenoaks.
Focusing on the small and medium sized business segment (SMB) in Europe, Personio has a total addressable market (TAM) of about $35 billion, according to our latest global TAM analysis. When investors put your valuation at 17% of the TAM, they expect a market leader to emerge in terms of revenue and market share along with the returns that come with it. The global TAM for HCM in the SMB in major global markets for HR tech is approaching $100 billion, according to our latest TAM analysis.
Focus is incredibly important for a tech provider to drive results. It’s not lost on us that Personio doubled down on its messaging stressing their SMB focus in their announcement. The SMB and adjacent Middle Market are the largest market segments globally. The HCM category is filled with legacy HR tech providers that have payroll roots and value proposition versus the kind of “people operating system” message that’s been built at Personio.
Supporting the people operating system message was Personio’s announcement of “People Workflow Automation Category.” This is largely just marketing. Workflow automation is, and has been, alive and well in HR for decades and has evolved to include AI, ML, conversational interfaces, and now the emerging low-code no-code tools. Automation at some level is also what most buyers of B2B tech believe they’re accomplishing with implementation of any tech.
Will Personio remain focused and satisfied to become the European market leader for HCM in the SMB? Probably not.
We’re just reading the tea leaves. But, we’ve seen them before. Aggressive funding and a massive valuation. Marketing that attempts category creation. These are right out of Lars Daalgard’s SuccessFactors playbook. Lars is a Personio investor. Personio’s next moves could be into the adjacent middle market, pursuing larger customers and average deal sizes or expansion into the US, the largest market for HCM where there are several tech providers that would look like interesting acquisition targets. Or, both. Personio’s focus on automation and customers focused on talent strategy almost demand it to move a little up market.
Personio is one we’ve been keeping our eye on.
$13.7 billion was invested globally in work tech through Q3 2021 across 299 deals. WorkTech Market Insiders can access insights and analysis of all of the deals in our Q3 report with a free membership.