SF-based 401(k) provider Human Interest just joined the city’s long list of tech unicorns. On Wednesday, the company announced the closing of its $200 million Series D funding round, which brings its valuation to $1 billion. This funding comes just half a year after Human Interest closed its $105 million Series C in February, and brings the company’s total funding to $336.7 million.
In addition to the funding, Human Interest also revealed that it’s gearing up for an IPO. To prepare for this, the company recently hired Mike Armsby as its CFO. Armsby was previously the CFO of Personal Capital and Yodlee, and will bring his executive experience leading publicly traded companies.
401(k)s are important financial tools to help people prepare for their retirement. You probably already knew that. And if you did already know that, chances are that you learned all about what a 401(k) is at your current or previous jobs.
Access to 401(k)s and 401(k) matching have been a go-to employee benefit for countless employers across the country. But despite their ubiquity, setting up and managing a 401(k) program for employees takes time and money. And as a result, a lot of small to medium-sized businesses aren’t able to offer 401(k) benefits to their employees. One report estimates that only 42 percent of businesses with less than 100 employees offer retirement benefits, which can make it a lot harder for employees at those other 68 percent of companies save for retirement.
That’s why Human Interest specifically focuses on providing 401(k) plans to small to medium-sized businesses. The company has developed technology that can automate setting up 401(k)s for these businesses, which helps employers and employees save on costs. It has also eliminated transaction fees, and streamlined the onboarding process in order to get more employees participating in plans. All of this means that employees are given better access to 401(k) retirement plans than they would be without an employer-sponsored plan, while employers are able to pay less than they would if they went with a different 401(k) provider.
Recently, Human Interest saw a big uptick in demand for its services from industries that don’t typically offer great retirement businesses, like construction, retail, manufacturing, restaurants, nonprofits and hospitality. The company also calls out that it achieved 4.5x revenue growth in the restaurant sector over the past three quarters and saw 2x higher enrollment growth from hourly workers compared to salaried workers.
“Without Human Interest, millions of employees, especially those below the 70th percentile in income, would never have access to a retirement account from their employer,” John Flynn, a partner at Human Interest investor TPG, said in a statement. “Human Interest is poised to have significant societal benefit, specifically for the employees of their customers.”
Human Interest plans to use this Series D funding to invest in new integrations and partnerships with financial advisors, benefits brokers and payroll companies. It also plans to use the funding to significantly grow its employee headcount. The company more than doubled its team in the past year, growing to 350 employees, but it plans to hire another 200 people by the end of 2021. The company says that these job openings will primarily focus on roles for its product, engineering and revenue teams.
“The need for a simple, affordable retirement benefit for employers and employees is clear,” Human Interest CEO Jeff Schneble said in a statement. “Sales have tripled over the last year. Our priority with this funding is to fulfill customer demand by advancing our product and dramatically scaling our team.”
