“The rounds are not a success as such, but they are a very important milestone that confirms our theory that we have a strong stake,” explains Jordi Romero, co-founder of Factorial, to Hipertextual. It is not for less. This statement comes just after announcing its record round of $ 80 million with the US fund Tiger Global Management.
For Factorial, the steps it has taken to reach this point are part of a process of seeking sustainable growth. For Romero, together with Pau Ramon and Bernat Farrero, the success of his company – and of anyone – is measured by the fact that to be able to grow in a healthy and sustainable way. The latest operation, which is added to that of 2020 of 15 million, are mechanisms to set a course for profitability. One that they claim “can be achieved in a few months if they set the goal.” Although, at the moment, it is being sacrificed for rapid growth. “When we run out of ideas to grow or where to invest we will go to that point, but at the moment there is a lot of market,” explains Romero.
Also to achieve your new goal: go public in the medium term. They do not want to give information on the dates they manage to make this announcement, but it is on the horizon. The choice of Tiger as an equity investor in Factorial had this objective as firm. Even so, there are many doubts to know how they will articulate this decision. If the human resources software company will choose a model similar – perhaps more traditional – to that of Flyware, which began trading on the Nasdaq in May of this year, or the one that sets the trend in the startup sector: SPACS and operations blank check. A model chosen by Wallbox, the Spanish manufacturer of chargers for electric cars that precisely today signs its operation before the end of 2021.
And yet, what is clear is that Factorial has managed to be a success in the field of software for human resources.
Factorial’s magic recipe or the formula for success
The origin of Factorial follows the logic of the birth of many other successful companies of the moment: the need and the opportunity. The human resources business has never been particularly attractive, nor has it had great entrepreneurial icons. Bernat Farrero, long before Factorial, saw this need with his previous venture: Camaloon. There was nothing useful to digitally manage teams. At a time when everything goes through a digitized system, this seemed like an interesting market niche.
They managed to create a kind of Plan Book or system capable of being replicated anywhere
First it was a free tool dedicated to managing employee vacations, and later they became brokers of employee payroll. Neither of these two ideas worked, but it brought the company closer to its current situation: in 2019 they found a successful business model. It was also at that time when other companies also began to emerge: Personio, Kenjo, Endalia … A long list to occupy a market niche in which at the moment Factorial occupies all eyes.
A SaaS or pay-per-use software in which the more employees and functionalities, the more you pay. This was the mechanism to launch into internationalization and that first great operation of 2020; the same one that was announced in the middle of the great confinement and at a time of great uncertainty.
However, they managed to create a kind of Plan Book or system capable of replicate anywhere. It is precisely in this concept where its success is born. Or as they say: a simple idea, complex to execute:
“We have made a global platform that can be used anywhere in the world, but then in the markets we want to focus on, we are local.”
Jordi Romero, co-founder of Factorial
On the way abroad with local teams
Photo by Israel Andrade on Unsplash
The round supported by Tiger will cement its growth in Spain, Europe, the United States and Brazil mainly, but Factorial had done the job before.
When the first wave of the coronavirus passed, and the survival measures of the companies materialized with the ERTES, the second step arrived: digitization at forced marches. The business plan worked so much that they made the decision to open up to other markets. The first of them was France. “We replicate the business model because it is a market similar to ours, but twice as big; It took us a few weeks to find all the levers, but later we realized that we had found the key, “says Romero.
So they made a radical decision: open 9 markets simultaneously. A goal that, they acknowledge, caused many internal differences. In the end, of all those that opened between Europe and Latin America, all went well except one: Italy. Although the market and culture, as well as the state of the technology industry, are similar, it did not end up with the same successes as in neighboring countries.
Despite everything, they argue that part of the success of their business, in addition to having found an attractive model, lies in the idea of local staff. SMEs are complicated, and they are also many, most of them lack the infrastructure dedicated to human resource management. It is impossible to approach them individually. More if you want to expand the business to the other side of the Atlantic. Factorial tried to control its business from Barcelona until it realized something that many other companies had not done before their business failed: that they had to have staff based in those regions. More if there are so many hours apart.
This is why Factorial took seriously the mission of “having native staff to interact with SMEs.” In addition to knowing each market, your long-term goal is to make them understand how to better manage the product.