human interest, A 401 (k) provider for small and medium-sized businesses (SMBs), announced on Thursday that it had signed another $ 55 million deal for its series.
The news is notable for one of two reasons. For one, the San Francisco-based company had already raised $ 50 million in two installments in 2020. Second, the majority of its existing backers (around 40 55) joined a new investor – the NEA spinout New View Capital (NVC) – Pumping more capital into human interest.
And last but certainly not least, the latest expansion – which closed in December but is now only being announced publicly – effectively doubled the valuation of human interest from its financing a few months earlier .
CEO Jeff Schneble would not disclose the company’s current valuation, but said human interest is “now in a position to become a unicorn”. The next time it arises, that round will be “the same phase-up as the last couple of financials”. Follows
With this latest expansion, Human Interest has now raised a total of $ 136.7 million since its 2015 inception.
The growth of human interest has been impressive. It has gone from adding about $ 100,000 per month to net new revenue in early 2019, now adding more than $ 1 million per month in net new revenue, according to Schneble. The startup aims to receive more than $ 2 million a month by the end of the year.
“We have grown about 10 times in the last 18 months and we are not going to stop here,” said TechCrunch. “Our goal is to get $ 100 million-plus ARR [annual recurring revenue] Over the next three years so that we can go public in the next three to four years. “
Since its launch, Human Interest says it has helped about 3,000 businesses across the US to offer retirement accounts to more than 80,000 employees.
The COVID-19 epidemic was challenging, but it led to an interesting change in the company’s business. Prior to 2020, approximately 85% of its customers were first-time 401 (k) users. Last year the number came down to around 50%. This means that more companies shifted from existing schemes to human interest.
“Given that there was a recession and a lot of uncertainty, it was a much easier pitch, given that we could offer a more affordable product,” Schneeble said.
Human Interest says it works with “all kinds of SMBs” – from tech startups to law offices, from dentists to dog walkers, manufacturing firms, and social justice non-profits. Customers include a San Francisco Bay Area electrician company, a Denver-based pizza chain, and a Seattle-based gas station and convenience store.
Despite being a few years old, Schneil said the company does not see itself as a startup.
“We want to build a very large company, which will last for decades, and can go public,” he said. “If we were trying to sell the company, we would be doing so differently.”
Currently, there are about 300 employees in human interest, slightly more than 100 a year ago. It plans to double the size of its engineering team this year.
Looking ahead, Schneble said the company is simply “one more to do”.
“We don’t need new products,” he told TechCrunch. “There’s a lot of runways just doing what we’re doing, and that’s taking market share from others.”
It plans to focus on improving the technology on its platform, which was moved from in-house provider to in-house in 2020. The move doubled its margin over the past six months, eliminating transaction fees for plan administrators. And the participants, according to Schneble.
“Often financial service products go bad,” he said. “We want to be the opposite, and this year is focused on making our stage as awesome as it can be.”
Human interest also says Launched a new offering, Full and concierge, In an effort to simplify the retirement plan administration last year and “To make retirement savings accessible to people across all lines of work.“
“Large incumbents have no idea how to make plans affordable and accessible to small companies,” Schneble said. “We knew that to make a lasting dent in this country’s retirement crisis, we would have to do something different.”
The 401 (k) location is actually a growing space. Last July San Mateo-based Guidelines – which also focuses on SMBs – announced one $ 85 million Series D round Co-led by Al Gore Generation investment management And Greyhound Capital. It was later revealed that American Express Ventures had Joined financing As an investor.
With more than $ 2 billion in assets under management, the new investor Newview Capital (NVC) – which also supports Plaid – aims to match late-stage financing with “significant operational support”.
NewView founder and managing partner Ravi Vishwanathan said He was impressed by how the company simplified the process and administration of 401 (k) s for SMBs and “is able to do so at low fees through software and automation”.
The NewView team was also modeled on the company’s desire to make 401 (k) accessible to more employers. In a blog post, Ankit Sood and Christina Fa wrote:
“Traditional 401 (k) providers such as Mohra and Fidelity designed and priced their plans for large businesses. Administrative burdens and high fees make it ineffective for small business owners. In fact, despite employing only a third of the working population, only 10% of small to medium-sized businesses (SMBs) offer 401 (k) plans to their workforce…Human Interest brings simple, inexpensive 401 (k) plans to 90% of small businesses that do not offer retirement plans today. “