Pioneering Sydney VC investor has banked more than $100 million from sales of its early stage investment in human resources technology startup Employment Hero.
The latest deal has produced what the sector calls a “dragon” – the return from a single investment matches the value of the entire fund. In this instance it’s a 1.5x dragon.
The VC made an initial $8.8 million investment in Employment Hero from its $75 million Growth Fund II, with the combined sales realising $116.2 million in total – a return of more than 13x.
OneVentures has backed Employment Hero several times, kicking off with the Series A nearly eight years ago and 2018’s $8 million Series B. Those original investments were via Fund II, which is headed towards the end of its life cycle. The VC sold $50 million worth of its Fund II holding to Insight Partners in 2021.
The HR platform hit a $2 billion valuation following a $263 million Series F in October to land 2023’s biggest local raise. That round was led by US fund Technology Crossover Ventures with support from Insight Partners, AirTree, Seek Investments and OneVentures, which invested a further $16 million through its 1V Growth Fund V and co-investment program.
The total value of the latest secondary transaction is nearly $68 million and was backed by local and international investors. It has two parts – a direct secondary into the TCV-led financing of $30 million and a $37.6 million continuation secondary fund with participation from local and Southeast Asian investors, managed by K Squared Capital. The continuation secondary fund was over-subscribed and will continue to be managed by OneVentures.
OneVentures managing director Dr Michelle Deaker said that while Fund II was reaching end-of-life and they needed a mechanism to exit its position, the VC remains committed to backing Employment Hero.
“Secondaries in this format really work for investors with those investors who want liquidity having the option to fully sell or part sell their position and those who don’t require liquidity and value the opportunity of holding the asset for longer being able to do so,” she said.
“In the current market, we know liquidity is more important than ever for our investors. In 2023, we have returned $77 million to our investors and remain focused on a cadence of our returns exceeding deployment in any given year.
“Direct secondaries into large growth rounds and continuation vehicles provide exit mechanisms for venture capital managers and we have capitalised on this.”
Dr Deaker said that overall Fund II has demonstrated top decile performance, with value-to-cost of over 4x and is continuing to grow in value.
OneVentures, the first of the new venture capital firms to emerge after the Global Financial Crisis, now has $840 million in assets under management and is currently raising its sixth fund.
In the wake of the latest sale, Dr Deaker is stepping down as chair of Employment Hero, having led the board since the startup’s inception in 2016. She will remain a director.