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Glassdoor Inc. has raised $40 million in a funding round that has lowered its share price, reflecting a shift by venture-capital investors to push back on the values of even promising startups.

Mutual fund giant T. Rowe Price led the funding for the online jobs and recruiting site, which enables employee reviews of employers. The stake brings Glassdoor's total capital raised to about $200 million while adding an institutional investor to a roster that includes Google Capital, Tiger Global and Battery Ventures.

Glassdoor's "post-money" valuation edged higher from a year ago when it was worth close to $1 billion, according to a person familiar with the matter. But the price of its shares fell 6.3%, to $8 from $8.54, from the company's previous round of funding.

"We view this as a slight up round," said Robert Hohman, Glassdoor's chief executive, saying the company's market capitalization had increased. The standard definition of a down round is the decline in a company's share price.

Many private tech companies, including delivery service DoorDash Inc. and database startup Couchbase Inc., have recently sold their shares at lower prices as investors have widely pushed back on private company valuations that soared during 2014 and 2015, often to levels far surpassing publicly traded peers.

Glassdoor shares, despite their 6.3% decline, significantly outperformed shares of publicly traded comparable LinkedIn Corp., which have fallen 37% in the same time frame, though the Nasdaq has risen 4%.

Unlike some other companies, Glassdoor didn't agree to onerous investment terms such as "ratchets" provisions or senior liquidation preferences to boost its share price artificially.

Mr. Hohman said the company plans to use the new funding to invest in product development, marketing and international expansion.

Some public companies that specialize in user-generated reviews, including Angie's List Inc. and Yelp Inc., have seen their share prices decline. Mr. Hohman said Yelp has struggled because the company specializes in selling to smaller accounts and Angie's List because it charges for reviews.

An Angie's List spokeswoman said the company plans new membership levels, including one that provides access to reviews at no charge. Yelp said in a May earnings conference call that about 20% of its first-quarter revenue came from larger "chain and franchise businesses."

Glassdoor, Mr. Hohman said, is more like TripAdvisor Inc. because both companies sell to larger enterprises, in Glassdoor's case to companies that want to sponsor pages on the site and buy ads to promote job openings to potential hires. Mr. Hohman said Glassdoor has 4,000 corporate customers and that it doesn't charge for people to read reviews because such information "wants and needs to be free."

Neeraj Agrawal, a general partner at Battery Ventures, which has invested in Glassdoor, said the fundraising environment has changed substantially since 2013 to 2015, when "you saw relentless focus on growth at all costs," a period he called "pretty anomalous." Now, he said, "the pendulum swings from one side to the other."

One reason his firm remains bullish on Glassdoor is because he thinks millennials will want more information when they are making career decisions, he said. Before Glassdoor, "if you were flying out to Seattle to interview with Microsoft, you could find out more information about your hotel than about the company you're interviewing with," he said.

By taking money from T. Rowe Price, Glassdoor will be exposing itself to an extra level of public scrutiny: mutual funds publish estimated share prices for their private tech holdings. Many companies have seen estimates of their share price reduced substantially, a fact that has surprised some private tech CEOs, and can lead to uncomfortable conversations with employees who are paid with shares or complicate deal negotiations.

Mr. Hohman said he was happy to have T. Rowe Price as an investor because of its "long-term" focus. As far as having an estimate for his share price published, he said private companies should get used to more scrutiny. "That's life in the big city—your share price is public. Get used to it."

When asked about Glassdoor's share price, and the fact that it had fallen from the prior funding round, Mr. Hohman declined to discuss it.

Write to Rolfe Winkler at rolfe.winkler@wsj.com and Tomio Geron at tomio.geron@wsj.com

(END) Dow Jones Newswires

June 03, 2016 07:55 ET (11:55 GMT)

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