€15M Series A to help SMEs globally better manage people - K Fund’s view on Factorial

Covid-19 has brought all of us many bad news during the last 2 months, and although the whole magnitude of the situation is still very uncertain, it seems that it will have a profound impact in all the different aspects of our lives.

For us, the startup ecosystem, the situation will be no different to the rest of the world and we will also suffer consequences. Many companies, especially from specific sectors like travel, will be on the verge of bankruptcy, with many jobs at stake. With this uncertainty, many VCs are on hold, securing their money to support their best portfolio companies and waiting for more insightful market signals that point them to the right direction. This is a difficult situation for all the stakeholders involved.

However, and given the circumstances for startups, we are proud to share good news, as San Francisco-based Charles River Ventures — CRV (investor in Twitter, Zendesk, Airtable, Dropbox and many more) has led a € 15M Series A round in Factorial, among existing seed investors Creandum, Point Nine and us, K Fund, who are increasing our share in the company. When the world burst into flames because of the Covid-19 in February, the company was closing the round with the lead investor, CRV, who maintained that whatever the macroeconomic and social situation, they were going to keep their bet on Factorial.

It is true that we are perceiving difficult times for founders raising funds from VC, but as we continue to do ourselves, many VCs will have to keep investing and companies with solid strategies and good management will still get access to VC funding, as is the case for Factorial.

Traditionally, the team responsible for HR in mid-sized businesses has spent its time performing low value-added processes and tasks (e.g., vacation and time tracking) and conducting the administrative burden of high-value tasks like performance management or hiring, processes that don’t have simple and affordable tools dedicated to this mid-sized segment.

HR teams need tools that make them evolve from a mere administrative team trying to find information to create reports, to a strategic team that can analyze the report and help the company manage its more important asset, people, and thus, provide a relevant stream of data to support C-level decisions.

Factorial — Everything you need to manage your HR processes

Factorial easily helps HR teams to manage all their operations and processes by providing their own functionality (Time tracking, performance management, documental management, etc.) and orchestrating 3rd party app services like payroll providers, reducing the administrative burden and bringing a data layer on top of all the services that allow to generate customizable reports and help in the strategic decisions.

At the beginning, companies need basic services such as payroll and time & attendance, which was the first focus of the Factorial product. As companies grow, they need to add performance management, track all the application processes, onboard correctly all their new employees, offer them benefits and fair compensation, etc. Factorial wants to help these companies to manage all their HR needs from a single tool, and for that, they are speeding up the pace developing all the new functionality required. If you have been using Factorial for some time now, you have already seen the increase in functionalities (If you haven’t, you should try it, it’s free during the state of emergency).

App store:

Managers don't want multiple, fragmented solutions. Right now, there is high complexity in all HR processes as they take place within many different tools and manual solutions that solve very specific problems. On top of the most common tools required by all the companies (e.g., Slack), Factorial is integrated with many external tools that solve very specific HR solutions, so that all processes can be streamlined from just one place.

Data platform:

As stated above, the high number of tools and custom-made solutions being used by the HR teams create a high data complexity, which doesn’t allow for a proper data collection, curation, visualization, and analysis system to support strategic decisions on probably the most important factor, people. To become a strategic partner for mid-sized companies, Factorial gathers in an organized way all the HR information and combines this people data with financial data, also key to strategic decisions.

Workflow automation:

When companies start to grow they need to set up processes and permissions to operate correctly. Mid-sized companies require tools that allow them to customize their processes as if they were a corporation with specifically developed solutions.

Conclusion

When we invested in Factorial 2 years ago, we couldn’t believe that SMEs, who are more than 90% of the market, still were lacking tools to manage their HR processes automatically, rather than with excel files and rudimentary custom-made solutions.

Now, even more so with the current remote-working situation because of Covid-19, these companies still need to manage their processes digitally, access to all the HR information in the cloud, and have it all organized in an actionable way for better decision making. With this latest round and their rockstar team, Factorial can do it.

• By K Fund
• 27/04/2020
• CRV, Creandum, Point Nine, K Fund, Factorial