OneVentures says Employment Hero is a start-up dragon

“There is no doubt Employment Hero is on track to becoming Australia’s next unicorn but to OneVentures, Employment Hero is a dragon – a whole-of-fund returner.”

After its founder Ben Thompson and Seek, OneVentures was the biggest shareholder in Employment Hero. It first invested in 2016 as part of a round that valued it at $10 million, and followed on by co-leading an $8 million series B round alongside Seek Ventures in March 2018. It then tipped another $7 million into a $22 million round that valued Employment Hero at $100 million in 2019.

Dr Deaker, who has been the chair of Employment Hero’s board since 2016, said that based on OneVenture’s first investment, the value of its stake had grown by 19 times. However, averaged over all the rounds, it had made about a 10 times return on its investment.

She said its second fund had increased in value by four times and investors were getting strong returns.

“The transaction underway is one of a number of significant realisations that have enabled OneVentures to return approximately $110 million in cash to investors, and we expect that number to more than double in the next 12 to 18 months,” Dr Deaker said.

OneVentures is currently midway through raising its fifth fund, which will target investments in growth stage tech companies, with revenues in the $5-10 million range.

Dr Deaker said OneVentures Growth Fund V currently had $100 million in commitments, and was likely to close in November at about $150 million.

However it has set a ceiling of $200 million, and has already committed $30 million of the fund to investments.

While it could look overseas to find new investment targets, Dr Deaker said it was most likely to back Australian companies, where they believed their own expertise and experience could be useful in building the company further.

“We are very hands on operational VC managers, and get quite actively involved in our companies,” she said.

“We always see ourselves as being more than just capital, because many of us have built and grown businesses ourselves and we have a lot of operational partners.”

Employment Hero has also proved to be a lucrative investment for Sydney-based AirTree Ventures, which first bought in back in 2016.

AirTree partner John Henderson said he had been “blown away” by Mr Thompson’s vision for making employment easier and more productive for small businesses, and how it had delivered on its plans.

“We invested in Employment Hero’s first round and have reinvested in three subsequent rounds. Those investments have generated an IRR (internal rate of return) of 91 per cent and our holding in Employment Hero now comprises a substantial portion of the fund,” Mr Henderson said.

“That same fund has backed multiple fund returners, as it is also invested in iconic Australian technology companies like Canva, Pet Circle, Edrolo and Hotdoc. It is one of the best performing venture funds of its vintage globally.”

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