(Bloomberg) — Financial technology startup Human Interest Inc. has raised a new round of funding at a $1.33 billion valuation as it expands its retirement services.
The company's latest funding 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 administrative and compliance work,” Schneble said. He added that customers can sign up for a Human Interest 401(k) in just three minutes.
The company said it recently surpassed $100 million in annual recurring revenue and expects sales growth of about 70% to 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 joining Human Interest. “I wouldn't have given up my fund to do this if I didn't think we could build a really meaningful company,” he said.
Schneble added that he is preparing the company for an IPO: “We will 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 after the IPO, it will remain a really attractive company that will be built almost non-stop.” 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 flow will help the startup with commercial partnerships. Schneble also said the main reason Human Interest raised new funding is to “have more money in the bank” as a buffer.
To contact the author of this story:
Katie Roof in Los Angeles at (email protected)