Apr
27
2020
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Factorial raises $16M to take on the HR world with a platform for SMBs

A startup that’s hoping to be a contender in the very large and fragmented market of human resources software has captured the eye of a big investor out of the US and become its first investment in Spain.

Barcelona-based Factorial, which is building an all-in-one HR automation platform aimed at small and medium businesses that manages payroll, employee onboarding, time off and other human resource functions, has raised €15 ($16 million) in a Series A round of funding led by CRV, with participation also from existing investors Creandum, Point Nine and K Fund.

The money comes on the heels of Factorial — which has customers in 40 countries — seeing eightfold growth in revenues in 2019, with more than 60,000 customers now using its tools.

Jordi Romero, the CEO who co-founded the company with Pau Ramon (CTO) and Bernat Farrero (head of corporate), said in an interview that the investment will be used both to expand to new markets and add more customers, as well as to double down on tech development to bring on more features. These will include RPA integrations to further automate services, and to move into more back-office product areas such as handling expenses,

Factorial has now raised $18 million and is not disclosing its valuation, he added.

The funding is notable on a couple of levels that speak not just to the wider investing climate but also to the specific area of human resources.

In addition to being CRV’s first deal in Spain, the investment is being made at a time when the whole VC model is under a lot of pressure because of the global coronavirus pandemic — not least in Spain, which has a decent, fledgling technology scene but has been one of the hardest-hit countries in the world when it comes to COVID-19.

“It made the closing of the funding very, very stressful,” Romero said from Barcelona last week (via video conference). “We had a gentleman’s agreement [so to speak] before the virus broke out, but the money was still to be wired. Seeing the world collapse around you, with some accounts closing, and with the bigger business world in a very fragile state, was very nerve wracking.”

Ironically, it’s that fragile state that proved to be a saviour of sorts for Factorial.

“We target HR leaders and they are currently very distracted with furloughs and layoffs right now, so we turned around and focused on how we could provide the best value to them,” Romero said.

The company made its product free to use until lockdowns are eased up, and Factorial has found a new interest from businesses that had never used cloud-based services before but needed to get something quickly up and running to use while working from home. He noted that among new companies signing up to Factorial, most either previously kept all their records in local files or at best a “Dropbox folder, but nothing else.”

The company also put in place more materials and other tools specifically to address the most pressing needs those HR people might have right now, such as guidance on how to implement furloughs and layoffs, best practices for communication policies and more. “We had to get creative,” Romero said.

At $16 million, this is at the larger end of Series A rounds as of January 2020, and while it’s definitely not as big as some of the outsized deals we’ve seen out of the US, it happens to be the biggest funding round so far this year in Spain.

Its rise feels unlikely for another reason, too: it comes at a time when we already have dozens (maybe even hundreds) of human resources software businesses, with many an established name — they include PeopleHR, Workday, Infor, ADP, Zenefits, Gusto, IBM, Oracle, SAP, Rippling, and many others — in a market that analysts project will be worth $38.17 billion by 2027 growing at a CAGR of over 11%.

But as is often the case in tech, status quo breeds disruption, and that’s the case here. Factorial’s approach has been to build HR tools specifically for people who are not HR professionals per se: companies that are small enough not to have specialists, or if they do, they share a lot of the tasks and work with other managers who are not in HR first and foremost.

It’s a formula that Romero said could potentially see the company taking on bigger customers, but for now, investors like it for having built a platform approach for the huge but often under-served SME market.

“Factorial was built for the users, designed for the modern web and workplace,” said Reid Christian, General Partner at CRV, in a statement. “Historically the HR software market has been one of the most lucrative categories for enterprise tech companies, and today, the HR stack looks much different. As we enter the third generation of cloud HR products, with countless point solutions, there’s a strong need for an underlying platform to integrate work across these.”

Apr
11
2018
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TravelPerk grabs $21M to make booking business trips suck less

TravelPerk, a Barcelona-based SaaS startup that’s built an end-to-end business travel platform, has closed a $21 million Series B round, led by Berlin-based Target Global and London’s Felix Capital. Earlier investors Spark Capital and Sunstone also participated in the round, alongside new investor Amplo.

When we last spoke to the startup back in June 2016 — as it was announcing a $7M Series A — it had just 20 customers. It’s now boasting more than 1,000, name-checking “high growth” companies such as Typeform, TransferWise, Outfittery, GetYourGuide, GoCardless, Hotjar, and CityJet among its clients, and touting revenue growth of 1,200% year-on-year.

Co-founder and CEO Avi Meir tells us the startup is “on pace” to generate $100M in GMV this year.

Meir’s founding idea, back in 2015, was to create a rewards program based around dynamic budgeting for business trips. But after conversations with potential customers about their pain-points, the team quickly pivoted to target a broader bundle of business travel booking problems.

The mission now can be summarized as trying to make the entire business travel journey suck less — from booking flights and hotels; to admin tools for managing policies; analytics; customer support; all conducted within what’s billed as a “consumer-like experience” to keep end-users happy. Essentially it’s offering end-to-end travel management for its target business users.

“Travel and finance managers were frustrated by how they currently manage travel and looked for an all in one tool that JUST WORKS without having to compare rates with Skyscanner, be redirected to different websites, write 20 emails back and forth with a travel agent to coordinate a simple trip for someone, and suffer bad user experience,” says Meir.

“We understood that in order to fix business travel there is no way around but diving into it head on and create the world’s best OTA (online travel agency), combined with the best in class admin tools  needed in order to manage the travel program and a consumer grade, smart user experience that travelers will love. So we became a full blown platform competing head on with the big TMCs (travel management companies) and the legacy corporate tools (Amex GBT, Concur, Egencia…) .”

He claims TravelPerk’s one-stop business trip shop now has the world’s largest bookable inventory (“all the travel agent inventory but also booking.com, Expedia, Skyscanner, Airbnb… practically any flight/hotel on the internet — only we have that”).

Target users at this stage are SMEs (up to 1,500 employees), with tech and consulting currently its strongest verticals, though Meir says it “really runs the gamut”. While the current focus is Europe, with its leading markets being the UK, Germany and Spain.

TravelPerk’s business model is freemium — and its pitch is it can save customers more than a fifth in annual business travel costs vs legacy corporate tools/travel agents thanks to the lack of commissions, free customer support etc.

But it also offers a premium tier with additional flexibility and perks — such as corporate hotel rates and a travel agent service for group bookings — for those customers who do want to pay to upgrade the experience.

On the competition front the main rivals are “old corporate travel agencies and TMC”, according to Meir, along with larger players such as Egencia (by Expedia) and Concur (SAP company).

“There are a few startups doing what we are doing in the U.S. like TripActions, NexTravel, as well as some smaller ones that are popping up but are in an earlier stage,” he notes.

“Since our first round… TravelPerk has been experiencing some incredible growth compared to any tech benchmark I know,” he adds. “We’ve found a stronger product market fit than we imagined and grew much faster than planned. It seems like everyone is unhappy with the way they are currently booking and managing business travel. Which makes this a $1.25 trillion market, ready for disruption.”

The Series B will be put towards scaling “fast”, with Meir arguing that TravelPerk has landed upon a “rare opportunity” to drive the market.

“Organic growth has been extremely fast and we have an immediate opportunity to scale the business fast, doing what we are doing right now at a bigger scale,” he says.

Commenting in a statement, Antoine Nussenbaum, partner at Felix Capital, also spies a major opportunity. “The corporate travel industry is one of the largest global markets yet to be disrupted online. At Felix Capital we have a high conviction about a new era of consumerization of enterprise software,” he says.

While Target Global general partner Shmuel Chafets describes TravelPerk as “very well positioned to be a market leader in the business travel space with a product that makes business travel as seamless and easy as personal travel”.

“We’re excited to support such an experienced and dedicated team that has a strong track record in the travel space,” he adds in a supporting statement. “TravelPerk is our first investment in Barcelona. We believe in a pan-European startup ecosystem and we look forward to seeing more opportunities in this emerging startup hub.”

Flush with fresh funding, the team’s next task is even more recruitment. “We’ll grow our teams all around with emphasis on engineering, operations and customer support. We’re also planning to expand, opening local offices in 4-5 new countries within the upcoming year and a half,” says Meir.

He notes the company has grown from 20 to 100 employees over the past 12 months already but adds that it will continue “hiring aggressively”.

Apr
19
2017
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Nauta Capital closes out $170M third fund

 Early stage VC firm Nauta Capital, which has offices in London, UK, Barcelona, Spain and Boston in the US, has closed out a 2016 fund raising — capping it off at $170 million. Read More

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