Factorial, a Barcelona-based “unicorn” startup, offers an all-in-one HR platform in the cloud for small businesses, earning $120 million undiluted (no equity) from common catalysts.
The company initially went viral and cut its teeth in the HR services boom along with social distancing during the Covid-19 pandemic via a “free” version of the product that has gained over 60,000 users. There was only a payment soon after, and CEO and co-founder Jordi Romero told TechCrunch in an interview that last year, its clients and revenues rose six times, reaching 13,000 paying companies. The factor uses modern cash injections to take advantage of that momentum.
Coincidentally, the news of factors about raising more money to turbocharge more money comes when HR sales and marketing efforts are suddenly in the spotlight. Rippling is suing Deel, claiming that he worked with spies to steal Intel on his customers and sales and marketing strategies. Deal denies the allegation.
From what we understand, Factorial is conducting an internal investigation to make sure “nothing is happening.” That is, the business is reminiscent of a lawsuit claim.
Having the funds to go to the market, as is now, is one way to grow your sales funnel. Unfortunately, among SaaS companies, poaching and other offensive tactics are also common as well as offensive tactics to ensure talent, lead and strategy. But this fresh $120 million factor clearly has a window into getting business away from such drama.
To be clear, this money is not a stock investment, nor is it a more classic form of venture debt. This money comes from the general Catalyst “customer value” fund. In effect, the factor is repayment from cash flow, particularly the factor repayment of profits from gross profits from customers that GC money has acquired is virtually a non-diluted loan (subjects not involved).
The money gained over the years as stocks rose was $120 million at a valuation of $1 billion in 2022, but remained untouched. And while GC has not acquired stocks in the investment, it sets up relationships that could lead to future stock financing.
From what we understand, Factorial is not currently considering raising a critical primary equity round anytime soon. It is more likely, and will raise the secondary round to give previous investors and employees some liquidity.
As Romero explained, General Catalyst's customer value strategy operates like an equity fund (excluding equity interests). Pay to many startups who want to increase their GTM and track performance across their portfolio. Some of the pools can sink, some can swim, the latter being a gamble made by the GC.
“Unlike debt, if a company does not invest in the market, there is no negative side risk, as GC takes negative side risk,” Pranav Singhvi, MD, general catalytic who runs the fund with ideas, told TechCrunch via email. He added that typical companies that earn funds like this are in late stages or public. (Singhvi also talked about customer value at length in this podcast in October 2024.)
Currently, after receiving $80 million on the same terms in April 2024, he borrowed $200 million from GC under those terms.
Sanghvi said GC currently has assets under control in the range of “10 people's numbers” (i.e. billions). Typically, in a month, hundreds of millions of dollars are deployed to SaaS, consumers, fintech, gaming and other types of companies. “We believe this is an important part of how companies fund future growth,” he added.