Factories Raises $120M to Build Enterprise-Quality Workforce for SMBs, Raises Value to $1B • TechCrunch

Small and medium-sized businesses, long neglected in the construction of innovative technology, have recently become a key focus in the world of B2B software. Now, a startup called Factorial — one of the biggest players in building HR technology for SMBs — is announcing a big round of funding in a “unicorn” valuation that highlights that trend.

The Barcelona startup has raised $120 million, making the Series C not only one of the largest for Spain, but also the largest to date from Europe. Led by Atomico, the round includes GIC as well as previous investors Tiger Global, CRV, K-Fund and Creandum. This public equity round is notable not only for its size, but also for its initial price tag: The plant is now valued at $1 billion, more than double the $80 million it raised a year ago.

The company will use the money to continue building additional technologies and products – expense cards are the next launch, currently in quiet beta mode – as well as for acquisitions and deep geographic expansion.

It has gathered around 7,000 customers across Europe in countries such as England and Germany (corresponding to hundreds of thousands of users, the average size of its customers is between 50 and 250 employees), but the largest part is Latino (Latino). Spanish and Portuguese) world, which includes not only Spain and Portugal, but also many emerging markets (altogether about 30 countries, and countless other common, if not official, languages).

This latter group also represents Factorial’s biggest growth engine. While developed markets such as the United States, the United Kingdom, and Western Europe are competing with SMB-focused startups for productivity and practical applications for SMBs, factories in developing countries have become a trailblazer by connecting small business units to sell human-friendly products and resources like their larger counterparts.

By combining those Latino markets, “together we can sell to 10 million customers,” Romero said. But we only have 7,000 customers. Our market share is ridiculously small and mostly greenfield.

The company has been growing since 2019 200% of that rate per year after the Covid-19 pandemic hit or slowed. Clients include divisions of Booking.com, Freshly, Vicio and others.

The rise of factories is coming at a tipping point in the macroeconomic sphere.

All eyes are on the labor market these days, with rising and falling unemployment not only the bellwether of the broader economy, but also one of the most direct for many of us – compared to more abstract indicators like interest and exchange rates – when it happens. Pinching comes down to how we feel. But surprisingly, the world of work had another focus – as a problem for tech startups to tackle.

The rise and rise of factories, at least to itself, seems to counter those fluctuations, and shows that businesses need to build the equipment they need to run their business efficiently, regardless of whether it’s economic or not. Climate.

CEO Jordi Romero, along with CRO Bernat Ferrero and CTO Pau Ramon, built the business with the larger goal of essentially creating a “workday” for companies too small to buy, implement and use enterprise tools. The key to doing so is keeping adoption barriers and usage very low, Romero said in an interview.

“Everything we do is about the user experience and making things easier for employees,” he said. “You should be able to run reports just on a customer or employee basis.”

Meanwhile, the company’s product is slowly expanding into an all-in-one productivity platform for all things employee-related. This includes shift and holiday management; crew on board and on board; performance management; Payroll: expenses; Organizational charts; and even internal workplace communications – all bundled into very straightforward pricing (and no premium tier).

In particular, most of them have been built in-house so far, and Road Factory plans to continue its journey as it grows. “We have our own products because we want to use the same playbook for everyone, focusing on what we believe is the core of the problem for SMBs” – devices that are fundamentally unfit for purpose, too expensive or too difficult to adopt, he said. “That’s our DNA, and that’s why we have to keep building the product from the ground up.”

(There are exceptions to this, according to Romero, payment due to local needs, for example, is available in nine markets and in each of the factories they are integrated with the local companies that actually manage the process.)

There is no doubt that the technology investment market and the overall technology market have come to terms this year. That means investors are definitely on top when it comes to sheets, but other dynamics are at play: VCs often rally around safe bets rather than moonshots. Put these two together and there are examples of startups still seeing strong reviews and competition to get people into their fold.

The scale of the factory he is seeing, and the huge market opportunity he has found and is successfully targeting, puts the startup in that rare position.

“We’ve been following Factorial for a long time,” Atomico partner Luca Eisenstecken told me in an interview. He said that the fact that the factorial was able to maintain strong growth through the epidemic and the recession and to “sustain this growth in moderation” are two important points. Atomico also spoke with customers, and while it didn’t disclose retention numbers, it described them as “huge.”

“Those metrics, combined with customer satisfaction, we think something special is happening. It’s become very clear how big the workforce problem is for these small businesses and how it’s been overlooked by so many. “Finally, they’re offering a completely horizontal suite that’s only been available to enterprises before. No one has digitized the lower end of the SMB market, especially in some countries. Eisenstecken is joining the board with this round.

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