Technical.ly’s Editorial Calendar explores a different topic each month. The May 2018 topic is venture capital. These stories explore trends in startup financing.
Ambler, Pa.-based Phenom People, makers of a human-resources-tech platform to help companies attract talent, is looking to expand its operations to Europe and the Asia Pacific region with fuel from a recently-closed $22 million Series B round.
Led by New York VC firm AXA Venture Partners, the round was also joined by several of the company’s previous investors: San Mateo Calif.-based Sierra Ventures, Boston-based Sigma Prime Ventures and Redwood City, Calif.-based Omidyar Partners. The new funding round will help the company ramp up its operations on three fronts.
“With this round we’re looking to grow our international markets, build a phenomenal leadership that can live up to our purpose and expand our product,” said CEO Mahe Bayireddi.
(For context: This appears to be among the largest Series B raises in recent Philly tech history. Zonoff’s 2014 $31 million Series B is the most recent contender in its weight class, with RJMetrics’ 2015 Series B coming in at a smaller $16.5 million. The most recent Series B round we’ve written about came in at $4 million: Center City-based Picwell, makers of a healthcare benefits recommendations platform.)
The company’s main hub is a 12,000-square-foot building inside the Ambler Yards redevelopment, where some 80 staffers from its team of 275 are based. Around 175 are in a tech hub in India, with another 15 in Israel and a few others in Europe and Canada. Over 100 companies in the 500-plus-employee range use Phenom People’s SaaS platform: think Southwest Airlines, Microsoft, Whole Foods and Phillips.
CEO Bayireddi, who founded the company alongside brother Hari Bayireddy (that’s not a typo: the brothers spell their last names differently due to a paperwork mix-up), and Brad Goldoor, said the company has been growing 100 percent or more for the past four years, but the global status of the kind of clients they’ve been acquiring calls for a greater presence beyond their current footholds.
“Almost every company with 1,000 employees or more has presence in several countries,” Bayireddi, 38, said. “Our audience is global, so the company should be global. Only then can we look to grow to the size we want. Europe is a very important expansion because it’s the next biggest potential market after the U.S. in areas like life sciences and the financial sector.”
The playbook for growth followed by Phenom People sounds familiar: an initial seed round was raised in 2013 from local investors like Karlani Capital, Kenexa cofounder Rudy Karsan’s fund, Richard Vague’s Gabriel Investments and a number of local investors. Then, in 2015, the company raised its Series A from Sierra Ventures, in a play to access bigger checks in addition to the West Coast’s contact network.
The route is similar to the one followed by companies like RJMetrics (which sought it’s bigger checks from Silicon Valley before selling to another West Coast company, Magento) and Guru, which raised local seed money but then turned to San Mateo Calif.-based Emergence Capital for its $9.3 million Series A.
In Phenom People’s case, being based in the Philly ‘burbs has helped in VC negotiating rooms.
“We got a lot of leverage because in Philly we need not spend too much money,” said Bayireddi, who lives about 10 miles north of Ambler in Warrington, Pa. “The cost of living is just more effective.”-30-
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