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PayScale lands $100M commitment from Warburg Pincus

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How much do you make? How much should you make? PayScale probably knows.

Over the past 14 years, PayScale has compiled a database containing 40 million salary profiles, all tagged with information about the amount of experience, job title, location, education, and other data.

Today, PayScale announced that private equity firm Warburg Pincus will invest up to $100 million in exchange for a majority stake in the company. The investment will help recapitalize the company (translation: give it a cash infusion while restructuring the ownership) and help it expand into new “growth initiatives.”

The investment from Warburg Pincus suggests that 40 million-record database is probably worth some serious money — it’s just that PayScale’s current management hasn’t figured out how to unlock its value.

The database has been compiled largely from people filling out surveys detailing how much money they make, how long they’ve worked at their current job, and a host of other details. People do this in order to get competitive intelligence: to find out whether they’re being paid fairly, how much they could make if they switched jobs or got a promotion, or how much they might make if they had a similar job in another city.

Of course, people might lie in their surveys, but PayScale applies proprietary algorithms to validate the data it collects and extract usable insights and trends.

In American culture, where it’s taboo (and sometimes actually against company rules) to talk about how much you make, such information can be very handy for job-hunters to have. Other sites, such as Glassdoor and Salary.com, provide similar information, though not on the same scale (Glassdoor boasts it has 10 million profiles, for instance).

And this data can be valuable for corporations that want to set compensation at competitive levels. PayScale says that it has more than 3,000 corporate customers in 13 countries, who use the products to make salary decisions for more than 2 million employees.

An earlier report indicated that Warburg Pincus would be buying PayScale outright. The release today merely called the investment a “majority investment,” which implies that the previous shareholders retain some stake in the company, albeit a minority one.

Previous investors include Fluke Venture Partners, Madrona Venture Group, SAP Ventures, Montlake Capital, Allen & Co., and Trinity Ventures. The company has raised $33.4 million to date.

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