Rippling’s Funding Round Gives Founder Second Unicorn Chance

(Bloomberg) -- Rippling, a software company started by former Zenefits co-founder Parker Conrad, has raised fresh capital valuing it at $1.35 billion.

Rippling, where Conrad is chief executive officer, has raised $145 million in a round that values it at five times its $270 million valuation in a previous funding round last year.

The financing was led by Founders Fund, with participation from investors including Coatue Management, Kleiner Perkins, Y Combinator and Initialized Capital.

Conrad began building the employee management software maker after his 2016 resignation from Zenefits, another company once valued in the billions that made cloud-based software to help manage human resources departments.

Under Conrad's leadership, Zenefits was accused of skirting regulations and ended up paying fines and settling with the the U.S. Securities and Exchange Commission in 2017. The company also paid $11 million fines in several states.

Yet some of the Zenefits' investors, including Founders Fund, are betting on Conrad a second time with San Francisco-based Rippling.

Napoleon Ta, a Founders Fund partner, said that the firm did its due diligence and determined that Conrad is trying to set the right tone at Rippling.

“They are really focused on getting the compliance and the culture right and setting really strong values starting at the top,” Ta said. “There are no shortcuts with Rippling.”

Rippling's investors said the business opportunity is large. Rippling builds employee onboarding software for small and midsize businesses, combining payroll with identity management software and a device management system. Half of its 250 employees are based in Bangalore.

Ta described the company as a combination of payroll processor Automatic Data Processing Inc., authentication software company Okta Inc. and mobile device management company Jamf Holding Corp. rolled into one. Jamf's shares have climbed 47% from their initial public offering price on July 21.

Conrad compared his business to Salesforce.com Inc., with the distinction that Rippling's software is for employee data rather than customer information. “Click one button to hire an employee,” he said.

Rippling's clients include other startups and it has tens of millions in revenue, Conrad said.

“I've learned a lot,” Conrad said. The chance to build a second startup is “an opportunity I don't take for granted,” he said.

©2020 Bloomberg L.P.