HR tech start-up Culture Amp shines with $2bn valuation

Melbourne tech company Culture Amp has tripled its customer base in the past year, and is now hiring hundreds more roles.

Culture AMP co-founder and CEO Didier Elzinga in his Melbourne office. Picture: Sarah Matray

Fuelled by blockbuster demand for employee engagement solutions, Melbourne-based HR software start-up Culture Amp has leapt past its competition to become one of Australia’s most valuable tech companies, landing a $US100m ($135m) funding round at an implied $2bn valuation.

Culture Amp CEO and co-founder Didier Elzinga said that while his company was cashflow positive and had no need to raise funding, he couldn’t say no to the opportunity for extra growth, particularly given the spurt in remote and distributed work thanks to the ongoing pandemic.

Culture Amp has grown its user base by 300 per cent in the past 12 months and will hire an additional 300 staff this year.

“The business is totally exploding,” Mr Elzinga said. “We see this huge opportunity to really define this category of employee experience, and that’s been a journey we’ve been on the whole time, but we are at a point right now where everyone’s trying to figure it out together.

“We’re in this unique position to help people write the playbook.”

HR technology has not created many large companies to date, and hasn’t received much backing from investors, according to Mr Elzinga, who said Culture Amp was “streets ahead” of its competitors both locally and abroad.

The company helps organisations modernise their approach to employee engagement and performance management, and its software platform is used by about 4000 organisations globally.

TDM Growth Partners and Sequoia Capital China led the $US100m Series F funding round, with participation from Salesforce Ventures and existing investors Felicis Ventures, Blackbird Ventures, Index Ventures, Sapphire Ventures, Skip Capital, Grok Capital and Global Founders Capital.

“We’re on track to smash $100m in revenue, as we said we would, and now we’re thinking about what it means to get to $500m in revenue,” said Mr Elzinga, who was formerly CEO of Hollywood studio Rising Sun Pictures.

“It’s been a struggle this year trying to keep up with the growth and not burn people out. We want to plan for the long term, and add key people who can be a core part of our future.”

He was unsure when asked whether the funding round brought Culture Amp closer to an IPO after tech companies Airtasker, Qualtrics and Monday.com celebrated stellar public debuts this year.

“Obviously continuing to grow at this pace puts you on that radar and allows you to do that if you choose to, but also being able to raise this sort of quantum of funds at a healthy valuation means that we’re in no rush and we don’t need to.

“If we would ever IPO we would do it because we thought that was the right next step for delivering on our mission.

“This probably means more people will assume that’s what we’re going to do, but it also in some ways it allows us just to focus on the long term, whether that’s an IPO or not.”

Hamish Corlett is the co-founder of TDM Growth Partners, a growth equity firm which led the funding round. “Ten years ago when we used to ask CEOs about the culture of their business, nine times out of 10 we got a blank stare,” Mr Corlett said. “There’s been a tidal wave of change in terms of leaders and their organisations now understanding the importance of culture to create great businesses and great organisations.

“In the last 18 months with distributed workforces and all the stress that puts on the system, employee retention and attrition is more important than ever, and we’re really excited by how Culture Amp are executing on that. They’re the clear leaders in their space.”

Rob Keith, head of Australia at Salesforce Ventures, added, “Culture Amp is the clear leader in employee experience, and as a customer for many years we’ve seen first hand the power of the Culture Amp platform to drive meaningful change in the workplace.

“We seek to invest in the most innovative cloud companies and founders, solving the world‘s most pressing challenges globally – Culture Amp is at the forefront of driving positive behaviour change at work.”