SmartHR, a Japanese HR software company valued at about $1 billion（約1600億円）, is delaying its Tokyo IPO to next year at the earliest after investors questioned whether the valuation was too high, citing concerns about AI's impact on the software industry. The delay reflects a broader slowdown in Japan's IPO market, which has seen significantly fewer listings over the past year.
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SmartHR, a Japanese HR software provider backed by KKR, has delayed its planned IPO to next year at the earliest. The company had targeted a valuation of about $1 billion（約1600億円） and is working with Daiwa Securities Group, Goldman Sachs Group, and Morgan Stanley on the listing.
Why it matters
Investors have raised concerns about the valuation being too high, citing worries about how the artificial intelligence boom could disrupt the software-as-a-service sector. SmartHR is one of Japan's few current unicorns (unlisted startups valued over $1 billion（約1600億円）), so the delay signals caution in Japan's IPO market—which saw first-half 2024 fundraising of ¥146 billion from new listings, the lowest since 2022.
What to watch
SmartHR had achieved a ¥170 billion ($1 billion（約1600億円）) valuation in 2021 and raised $140 million（約220億円） in a 2024 round led by KKR and Teachers' Venture Growth. The timing and valuation could still shift as discussions continue with banks and investors.
SmartHR's IPO delay underscores mounting investor skepticism about software valuations in an AI-uncertain environment. The company had achieved a ¥170 billion ($1 billion（約1600億円）) valuation in 2021, and KKR and Teachers' Venture Growth had backed a $140 million（約220億円） funding round in 2024, signaling strong institutional confidence. However, the gap between that recent backing and current investor caution on the $1 billion（約1600億円） target suggests the AI disruption narrative has shifted market sentiment in just months—particularly for software-as-a-service providers, whose competitive moats are perceived as vulnerable to large language models and AI-driven automation.
The delay also reflects broader headwinds in Japan's IPO market. First-half 2024 saw only ¥146 billion in new listings, matching 2022's low, and the number of small-sized IPOs last year hit a decade low, partly as the Tokyo Stock Exchange's reform push prompted companies to reconsider quick listings. SmartHR, as one of Japan's rare current unicorns, was positioned as a marquee candidate; its postponement signals that even well-backed, high-profile startups face pricing friction when investor appetite for software companies cools. The article notes that timing and valuation details could still change as discussions continue—a hedge that underscores both the fluidity of negotiations and the absence of a firm new date.
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