(Bloomberg) -- Financial technology startup Human Interest Inc. has raised a new funding round at a $1.33 billion valuation as it expands its retirement services.
The company’s latest financing brought in $267 million in a combination of equity and debt in a deal led by investment firms Marshall Wace and Baillie Gifford, the startup plans to announce Wednesday.
Founded in 2015, Human Interest saw a market opportunity for small businesses to offer 401(k) plans as an employment benefit, said Chief Executive Officer Jeff Schneble. The idea behind the startup is that smaller companies will be able to offer retirement programs without “a ton of administration and compliance work,” Schneble said. He added that customers can sign up for a 401(k) on Human Interest in as little as three minutes.
The company said it recently surpassed $100 million in annual recurring revenue, and that it expects sales growth of about 70% for 2024. More than 25,000 companies have signed up for its services to date – and the average size of those companies is small, about 24 employees.
Schneble was a partner at Wing Venture Capital before he joined Human Interest. “I wouldn’t have left my own fund to do this if I didn’t think we could build a really meaningful company,” he said.
Schneble added that he’s preparing the company for an IPO: “We’ll definitely be ready in less than two years.”
Ankit Sud, a partner at NewView Capital, said he thinks the startup has room to grow. “Five to ten years post-IPO, it’s going to remain a really attractive company that will compound pretty much nonstop.” Sud also said that offering benefits can help small businesses remain competitive in a tight labor market. “It’s almost a moral imperative to encourage employees to save for retirement,” he said.
The company’s latest funding round consists of $242 million in equity and $25 million in debt .The new cash influx will help the startup with commercial partnerships. Schneble also said that the primary reason Human Interest raised new funds is to “have more cash in the bank” as a buffer.
To contact the author of this story:
Katie Roof in Los Angeles at [email protected]