Factorial, a startup based out of Barcelona that has built a platform that lets SMBs run human resources tasks with the same tools that are typically used by much larger companies, has today raised some funding to bolster its position. Are announcing: The company has raised $80 million, in funding that it will use to expand its operations geographically – particularly deeper into Latin American markets – and grow its product offerings with more features for.
CEO Jordi Romero, who co-founded the startup with Pau Ramon and Bernat Ferrero — said in an interview that Factorial has seen a huge jump in growth over the past 18 months and averages over 75,000 customers in 65 countries. is counted with. 100 employees per customer, although they can be significantly (single-digit) small or potentially up to 1,000 (the “M” of SMBs, or SMEs as it is often called in Europe) .
“We have a lenient definition of SME,” Romero said of how the company first started with a target of 10-15 employees, but is now working across size brackets. “But that is the limit. This is the segment that needs the most help. We see our other competitors trying to get into SMEs and they are spoiling their product by making it too complex. SMEs want such solutions. Which has maximum data in one place. This is unique for SMEs.” Customers can also include smaller franchises from much larger organizations: KFC, Booking.com and Whisbi are among those that fall into this category for factorial.
Factorial provides a one-stop shop to manage hiring, onboarding, payroll management, time off, performance management, internal communications and more. Other services such as the actual process of sourcing payroll or candidates, it partnering and integrating with more localized third parties.
The Series B is led by Tiger Global, and previous investors CRV, Crandum, Point Nine and K Fund are also participating, at a valuation we understand from sources close to the deal to be about $530 million in the money. Factorial has raised $100 million so far, including a $16 million Series A round in early 2020, just before the COVID-19 pandemic really took hold of the world.
That timing proved crucial: Factorial, as you might expect an HR startup, was shaped very powerfully by COVID-19.
The pandemic, as we have seen it, has massively changed how – and where – many of us work. In the desk job world, offices largely disappeared overnight, people moved to work at home in compliance with shelter-in-place orders to curb the spread of the virus, and then in many cases companies remained there even after being removed as Faced with both the best (and least infectious) way to forward and balancing their own employees’ demands for safety and productivity. Meanwhile, front-line workers faced entirely new challenges in doing their jobs, whether it was mitigating the risk of the coronavirus, or dealing with the massive demand for their services. In addition to the two, organizations were facing economics-based contractions, furloughs and, in other cases, the push to hire, despite it being office-less to cater to all.
All this had an impact on HR. People who needed to manage others, and who were working for organizations, suddenly needed new types of tools to perform their roles – and they were willing to pay.
But it was not always so. In the early days, Romero said the company had to quickly adjust to what it was doing in the market.
Romero told me during Series A in early 2020, “We target HR leaders and they are currently very distracted by furloughs and layoffs, so we turned to focus on how we can provide them with the best value.” can.” Then, Factorial made its product free to use and found renewed interest from businesses that had never used cloud-based services before, but were quickly looking to get something to use while working from home. (and that cloud migration turned out to be a huge trend played out in many areas). Those turning to Factorial previously kept all their records in local files, or at best a “Dropbox folder, but nothing else,” Romero said.
It also provided tools specifically to address the most pressing needs of HR people at the time, such as how to enforce furloughs and layoffs, best practices for communication policies, and more. “We had to be creative,” Romero said.
But it wasn’t all easy. “We were suffering in the beginning,” Romero says now. “People were furloughing and [frankly] Software procurement was getting less attention. People were still surviving. Then slowly, people realized that they needed to improve their systems in the cloud, better manage remote ones, etc.” So after some very slow months, things started to move forward, he said.
The rise of Factorial is part of a longer, longer-term larger trend in which the enterprise technology world has long turned its attention to how tools were originally built for large organizations, and They should be sized right for smaller customers.
The metrics are completely different: Large enterprises are harder to win over as customers, but represent a huge payoff when they sign up; Small enterprises represent real scale because there are so many of them globally – 400 million, accounting for 95% of all firms worldwide. But there are also demands for the product, as Romero pointed out earlier: SMBs also want powerful devices, but they need to work in a more efficient and out-of-the-box way.
Factorial isn’t the only HR startup honing in on this, of course. The broad areas are PeopleHR, Workday, Infor, ADP, Zenefits, Gusto, IBM, Oracle, SAP and Ripple; And a very close competitor outside Europe, Germany’s Persio, raised $125 million earlier this year at a $1.7 billion valuation, not just for the opportunity but the success it’s seeing.
But the major fragmentation in the market, the fact that there are so many potential customers, and Factorial’s own rapid traction are three reasons why investors approached the startup, which actively finances it, when deciding to go ahead with this Series B. Was not seeking nutrition.
“The HR software market opportunity in Europe is enormous, and Factorial is incredibly well positioned to capitalize on it,” John Curtius, partner at Tiger Global, said in a statement. “Our diligence has resulted in a product that delights customers and a world-class team well positioned to realize Factorial’s potential.”
“It is now clear that labor markets around the world have shifted in the past 18 months,” said Reed Christian, general partner at CRV, who led its previous round, which was CRV’s first investment in Spain. “This has put stress on employers who need to manage their human resource processes and serve their employees properly. Factorial was always tailored to support employers across geographies with their HR and payroll needs, and this has only accelerated demand for their platform. We are excited to continue supporting the Company through this funding round and the next phase of growth for the business. “
Specifically, Romero told me that the fundraising process actually evolved between the two tours, the first requiring him to fly around the world to meet people, and the second happening over video link, while he himself was recovering from Covid-19. Given that it wasn’t that long ago that the most ambitious startups in Europe were encouraged to move to the US if they wanted to be successful, it seems that it is not just the HR world that is increasingly facing the new global conditions. changing accordingly.