New unicorn: Factorial needs to revolutionize HR for SMEs — and is now value $1 billion
- October 12, 2022
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Startup that digitizes processes such as hiring and managing the timesheet has just raised US$ 120 million; Brazil is main ambition
The select list of unicorns, companies with inflated valuations that exceed US$ 1 billion, just gained a new member. It is the Spanish startup of human Resources Factorial, dedicated to digitizing operational processes of small and medium-sized companies around the world. Eight months ago in Brazil, the Factorial already has more than 500 customers.
The startup reached the billionaire value with a Series C round of $120 million, led by the Atomico group, an investment firm with more than $5 billion under management. In addition to Atomico — whose partner Luca Eisenstecken joined the company’s board — the funds GIC, Tiger Global, CRV, K-Fund and Creandum, all long-time investors in Factorial, also entered the round.
What does Factorial do?
Factorial’s focus is on productivity improvement of HR teams in small companies. For this, it created software that promises to replace repetitive routines and that can optimize the decision-making of different leaders, who can start to think about the strategic while technology takes care of the rest.
In the list of actions are the control of working hours, vacations, payment of salaries and even performance management. The idea is to automate and also integrate processes processes in a single place, facilitating recruitment, onboarding, absence management, among others. Altogether, there are more than 7,000 clients in nine countries, including prominent startups such as SouSmile and AgroTools.
The company was born in Barcelona, in 2016, by the hands of Jordi Romero, Bernat Farrero and Pau Ramon, three entrepreneurs with deep experience in creating productivity software.
But it was from 2019 that the business took off. Since then, in the face of rapid changes in the job market and the massive adoption of new technologies, the company’s revenues have quadrupled. The success led Factorial to extend its presence around the world — today, in addition to Spain, the company is also present in the United States, Mexico, United Kingdom, Germany, Italy, Portugal, France and, more recently, in Brazil. The driver for internationalization was a check for R$ 410 million, signed by Tiger Global a year ago.
Why Brazil is important for the company
A little less than a year in Brazil has already made the country the Factorial’s most relevant market.
Even with the challenging context for small businesses around the world, the company has grown exponentially, according to Romero. “We help companies make better decisions, and this is something very important, especially in times of crisis”, says the CEO in an interview with EXAME.
The rationale lies in helping human resources leaders with “fewer resources available in financially difficult times”, a scenario that can favor companies that develop technologies for these and other management challenges.
According to the CEO, Factorial’s addressable market in Brazil today is immense, considering the exorbitant amount of SMEs that exist here. “Today, 90% of small businesses have nothing to do with software, and they still don’t know the reality of automation,” he says.
In Brazil, there is a need for reports that can make the operation more intelligent and analytical, given the complexity of labor laws, he says. “It is something little explored. The opportunities are endless.”
According to Romero, Factorial’s addressable market, in Brazil alone, is around 10 million small companies. “It’s a gigantic opportunity ahead of us,” he says. “There is a digital transformation in Brazilian companies that motivates a growing search for more accurate technologies”.
where does the money go
Factorial’s idea is to take advantage of the cash provided to expand its presence in the markets in which it already operates, with Brazil being the destination of most of the resources. This includes creating new products and services dedicated to SMEs. “We want to solve more problems for an increasing number of companies”, says Romero.
The plans include the expansion of a corporate expense management solution that manages invoices and, at the end, also creates charts for monitoring by finance managers. The company also plans to launch, still in 2022, a corporate credit card, thus launching itself into a multi-million market already served by unicorns such as the Mexican Clara and the American Jeeves.