HR and payment software startup Rippling said on Friday it has raised $500 million in a new funding round initially intended to help customers make payroll in the immediate aftermath of Silicon Valley Bank’s collapse.
The round, led by technology investor Greenoaks Capital, gave Rippling the same valuation of $11.25 billion it had clinched after its previous capital raise last year, the company said. After learning some of its clients’ payroll funds were stuck at SVB last Friday, Rippling Chief Executive Parker Conrad decided to use $130 million from the San Francisco-based company’s own balance sheet to make sure payrolls were processed on time.
Unclear if customers’ funds would be recovered by Monday, Conrad started to seek more capital from investors, whose funds were also partly stuck with SVB.
This fundraising event, put together within 24 hours, highlighted how the tech ecosystem, from startups to investors, was deeply unsettled by the surprising and fast collapse of Silicon Valley Bank, formerly a unit of SVB Financial.
Growth equity firm Greenoaks was one of Rippling’s investors that have funds available to wire on Monday. The two agreed to keep Rippling’s valuation from May 2022, in a rare flat round when late stage companies’ valuations were falling amid higher interest rates.
“We were intending to raise money either later this year or early next year. We pulled it forward about a year and it’s going to buy down any risk that we have around what happens with SVB on Monday. It’s a small amount of dilution for the company,” said Conrad.
By Sunday afternoon, as the U.S. Federal Deposit Insurance Corporation (FDIC) guaranteed all depositors of the bank access to their money, Rippling and Greenoaks decided to proceed with the funding, although Rippling no longer needs the funds to cover its clients’ payroll.
Sitting on over $1 billion cash, Conrad said he hopes this is the company’s last private raise, adding that the not-yet-profitable firm has no specific plans for a public listing. It has also moved its banking partner from SVB to JPMorgan Chase.
Rippling offers services to businesses to manage their human resource and information technology operations such as employees’ onboarding and payroll management. It said it has over $100 million in annual recurring revenue, which grows at over 100% annually, serving over 400,000 users across industries from retail to healthcare.
Conrad said the company will keep investing in R&D and product development.
“This capital is going to further insulate us from whatever might happen in macro economy over the next year, and allows us to keep investing to keep building great products for our clients,” said Conrad.
(Reporting Krystal Hu in San Francisco and by Niket Nishant in Bengaluru; Editing by Shounak Dasgupta, Nick Zieminski and Richard Chang)
