Enterprise human resource technology (HRtech) services provider Darwinbox, last month, became Salesforce Ventures’ first Indian startup investment, and second investment in Asia.
How does the six-year old venture take on a crowded HR tech sector? Short answer: With one brand at a time. Long answer: Read on.
Indian HRtech business space is now flooded with top players like IBM and TCS, along with seasoned players like Zoho and PeopleStrong, as well as venture capital backed startups such as DoSelect, Qandle, Benepik, Hyperhire, Kredily, Talview, Greytip.
When Salesforce Ventures -- the venture capital arm of the CRM giant -- came knocking on Darwinbox’s door, late 2020, the Hyderabad headquartered company did not refuse, despite there being no plans for raising capital at that point in time. Software businesses run on great margins and low costs.
From August of 2019 to October 2020, Darwinbox grew with 3X revenues. It had enough money in the bank and was unwilling to dilute further equity. The company had about 2.5 years of cash runaway left.
“It's not just about being chosen. It is also about enterprise view. I can go into a company where Salesforce exists. And the CIO knows that this is invested in by Salesforce. So these guys must be doing something right. That's where we felt this is not just about the money that we need… It is more about how this will help us grow faster. And that's where I think the biggest excitement for us is our global journey, our global expansion journey,” co-founder Rohit Chennamaneni told TechCircle in an interview.
Founded by Chennamaneni, Jayant Paleti, and Chaitanya Peddi in 2015, Darwinbox set up shop in Singapore in 2019. The company was on rampant expansion in the Southeast Asian markets, even before the pandemic struck and had secured a $15 million investment in August 2019.
It now aims to register 300% growth over 2021, in revenue terms, as it charts a global expansion plan into the Middle East, Africa, and Asia-Pacific regions. Currently, it employs a total of 400 workers across five offices in India, and two other offices in southeast Asia. The team has doubled within 2020, the company told TechCircle.
The fresh investment from Salesforce, according to Darwinbox, helps it get a foothold in the international market. “Obviously you can go and get advice from them, but nothing like them having skin in the game, where they open up the learnings, connect us to the best of the best in their organizations, to help us out. And the second thing was while we launch in new markets, everywhere, Salesforce is one brand everybody understands. And especially in enterprise business, when you're selling to large companies, you need some reference point,” Chennamaneni said.
The global expansion journey suddenly appears easier, given how startup problem of trust is solved with established brand names on one’s side -- a prerequisite, some would say, in the business of enterprises with set allocation of budgets and standards.
“The whole journey has been to prove yourself to serve these great brands. And there are deals where we lost even when they appreciated the product to be better than our global counterparts. But they said, hey, a brand is safer,” Chennamaneni said.
It is still day one at the company, he stated.
Darwinbox’s strategy of tackling the startup problem is what it hopes will set it apart from the rest. It has got on its cap table established and branded players, and subsequently built word-of-mouth references by shoring up the best from the industry for its first sets of clientele, Chennamaneni said.
The company’s over 500 global enterprise clientele count, as per its website, include established corporates such the National Stock Exchange (NSE), Nivea, Kotak, Kirloskar, Arvind Fashion, Adani Wilmar, Dr Reddy's, Emcure, Tata Cliq, Bharti AXA, Bisleri, ACT Fibernet, HT Media, Times Internet, Mahindra Logistics, L&T Metro Rail, as well as startups such as Myntra, Paytm, InMobi, Zilingo, Rivigo, Delhivery, Swiggy, InCred, Bigbasket, MakeMyTrip, and WeWork.
The company’s investors include the likes of former Infosys director Mohandas Pai, 3one4 Capital, Endiya Fund, Lightspeed India, Sequoia Capital, and most lately, Salesforce Ventures.
As for the founding team, former McKinsey and Google employee Chennamaneni holds experience in blending business strategy and technology. Paleti, an IIT Madras and IIT Lucknow alum, has had investment banking and consulting experience. XLRI alumnus Peddi worked as a HR consultant at EY and also has product building experience from his time at Verizon.
While Peddi heads product and engineering at Darwinbox, Chennamaneni leads operations and customer success, and Paleti leads sales and marketing, apart from international expansion, finance and investment. The company follows no CEO structure.
So, what does Darwinbox offer?
From HR workflow, time and attendance, payroll, help desk, recruitment, onboarding, employee engagement, performance management, rewards and recognition, travel and expense management, management information system and analytics, are some of the key softwares of the Darwinbox solutions suite.
And, there is room for growth. “There is technology around maps, there is technology around facial recognition, there is technology around customizable workflows, analytics, et cetera. All that exists in the market. Nobody had translated that to HR tech,” Chennamaneni said, commenting on the industry’s growing appetite for HRtech over the years.
The company built its suite around existing tools such as WhatsApp, and voice bots, and location based technologies. The second aspect of Darwinbox’s technology is how it built a system from ground up to be a lot more configurable.
“If you go to a global system, they'll say, ‘oh, performance management has to be done in these four steps. The employee has to write the review, the manager has to write the review.’ Now if I have a different process, they will say this is not best practice. They will say ‘we always offer best practice, so you change your process.’ What we did with the system is we said, we'll give you a workflow builder.” he added.
The two strategies, Chennamaneni is convinced, have worked well in the company’s favour in driving higher adoption in clients. During the pandemic, the growth curve accelerated and the company said it onboarded over 180 customers at the time.
Disclosure: HT Media, which owns Mosaic Digital, the company that publishes TechCircle, is a client of Darwinbox.