Darwinbox, a Hyderabad-based software as a service (SaaS) firm focused on HR management, has raised US$40 million from Ontario Teachers’ Pension Plan’s Teachers’ Venture Growth arm.

The round includes both primary and secondary transactions and values the company at about US$1 billion.

Peak XV Partners partially sold its stake as part of the secondary deal.

Darwinbox said the funds will support its international growth, especially in North America.

The company was last valued at US$1 billion in 2022 after a US$72 million round led by TCV.

Darwinbox reported a 58% rise in revenue to 392 crore rupee (US$44.8 million) for 2023-24.

Founded in 2015, the company serves over 1,000 enterprises in 130 countries, with clients including Starbucks, Nivea, Cigna, WeWork, and Crisil.

Ontario Teachers’ Pension Plan has previously invested in Indian startups such as Mintifi, Perfios, and Xpressbees.

🔗 Source: The Economic Times

🧠 Food for thought

1️⃣ Flat valuations signal maturation challenges despite revenue growth

Darwinbox’s valuation has remained essentially flat at $1 billion across three funding rounds since 2022, even as the company reported 58% revenue growth to Rs 392 crore in 2023-24.

The company achieved its $1 billion valuation in January 2022 with TCV’s $72 million investment 1, maintained it through March 2024’s $140 million round with KKR and Partners Group, and now holds the same valuation in OTPP’s $40 million investment.

This pattern suggests that while Darwinbox is growing, investors may be tempering expectations about its scaling potential or waiting for stronger proof of international market penetration before driving up valuations.

The flat valuation trend contrasts with Peak XV Partners’ strong 10-fold return since its 2019 investment, indicating that early investors captured most of the valuation appreciation during Darwinbox’s initial growth phase.

2️⃣ HR SaaS companies face intensifying competition from both ends of the market

Recent Darwinbox developments