Darwinbox eyes bigger pie in US HR mkt

Hyderabad Every milestone comes with a bigger responsibility, so is the case with Hyderabad-based human resources management software provider Darwinbox, which is gearing up to make it big beyond the South Asian market. The seven-year-old startup, which is the first unicorn from Hyderabad, has entered a highly competitive and evolved human capital management (HCM) market in the US. The unicorn is investing huge to create a brand presence in the US by placing its bet on talent and technology such as generative artificial intelligence.

Darwinbox has 800 customers, two million users and 12 offices across the globe including Bangalore, Delhi, Singapore, Dubai, New York among others. Its global headquarters is in Hyderabad wherein 1,200 employees are seated, majority working on product development.

Till date, Darwinbox raised a total investment of over $120 million, thus becoming Hyderabad’s first unicorn (startup with valuation of $1 billion) last year. Darwinbox rose to spotlight and so the city’s startup ecosystem got an opportunity to celebrate.

“People in my extended family showed interest, due to the buzz created around unicorn. Being a unicorn brings more responsibility. There is a baseline that is set and suddenly you have to run beyond that. We obviously need to grow the business and return money to the investors at a much higher valuation,” Rohit Chennamaneni, co-founder of Darwinbox, told Bizz Buzz.

In the last quarter of FY22, the startup raised $72 million in Series D and $9 million from SBI and Microsoft in an extended Series D round. On utilising investments, Chennamaneni said, “The investments are being utilised for geographical expansion and technology like AI, design language. If we do not make the investments now, then there are high chances of falling behind. The US is on our focus now as it’s a very competitive and evolved market. It needs a lot of investment to build a brand in that region. We have a great product and we have companies who are using our product, but we do not have a brand presence there.”

The other new markets Darwinbox is planning to enter by 2024-25 are UK, China and Australia. The SaaS (software-as-a-service) startup will be adding about 100-200 talent at its global development headquarters in Hyderabad to develop technology for the US clients. “Design language changes very often in terms of what the end user is expecting. So, we need to upgrade that to stay ahead of others. The second thing we are investing hugely is the generative AI space because HR content is more of language wherein AI has made conversation as a language, and that’s where we see lot of progress and hence, we are investing a lot of money, effort and headcount into it,” the Co-founder said.

Chennamaneni said Darwinbox would start churning out profits from next year. “Our India business has been around for five years, so profits will be visible by next year. But we can expect profits from our US business only after four years,” he said.

According to him, in SaaS model, investments on products and sales should be made upfront while returns come on recurring basis. “Instead of entering new markets immediately, we would rather make our existing businesses profitable and focus on few markets like the US which have high growth rates,” he said. Reiterating that Darwinbox would tap capital markets in two to three years, he said: “We consider ourselves a strong IPO candidate due to a strong presence in three of our markets and being among the top two players in Asia with a $100 million ARR (annual run rate). Besides, Microsoft also invested. We are also expecting decent revenues from the US as well”.