BrioHR raises $1.3M ahead of Y Combinator’s demo day

As the next Y Combinator demo day approaches, more startups from the current Winter 2021 batch are showing up in our inboxes. One of the most interesting from the mix is BrioHR, which is building human resources (HR) software for Southeast Asia.

The company fits into a theme I’ve noticed amongst startups, namely a focus on taking proven software genre approaches to specific parts of the world, localizing them and building in-region winners. This theme is not new, of course, but it does feel slightly more pronounced amongst recent accelerator batches than before (TechCrunch covers Techstars, Y Combinator, 500 Startups and other accelerators as part of our startup focus). Perhaps this is the impact of so many accelerators going virtual, widening the founder pool from whom they might matriculate to include a more global group of founders.

Back to BrioHR itself, the company is announcing $1.3 million in fundraising, inclusive of its YC check. The investment was led by Global Founders Capital, and saw participation from East Ventures and angel investors.

TechCrunch caught up with Benjamin Croc, the company’s co-founder and CEO, who is located in Kuala Lumpur, Malaysia (the city pictured in the image at the top of this post). The time zones were tricky to navigate, but the company’s vision was simple enough: A software-as-a-service (SaaS) HR software suite, tailored to fit the laws of the Southeast Asian region.

Croc and his co-founder, Nabil Oudghiri, founded the company in 2018, incorporating in the second half of the year after talking over their idea for a few months. BrioHR did not launch its product until the fourth quarter of 2019, opening for what Croc described as early adopters. The startup launched more broadly in the first quarter of 2020, right in time for COVID-19 to shake up the world.

Its fundraising came in two chunks, one in the middle of 2020 and one that came in the third quarter of the year; the first chunk of the raise was larger than the second. BrioHR raised the capital using a convertible note, with terms that Croc described as near to standard.

In our conversation, TechCrunch was curious about how prevalent SaaS as a model is in Malaysia and the other countries the startups wants to sell into. The co-founder said that while SaaS is not as well known in his part of the world as it is in the United States — not a huge surprise given that the U.S. is the largest SaaS market in the world — he praised the speed at which Southeast Asian countries adopt business trends; if Croc is right, his view could point to a very active subscription software market in the region in coming years.

BrioHR competes with local companies that are more focused on providing single solutions, like payroll management. From our discussion, it appears that Croc hopes that by going broad, in a feature sense, BrioHR will surpass legacy competitors. The startup is itself still building out its regional tooling, providing payroll support in only a handful of countries. It intends to expand that service to new countries this year, and be everywhere with its payroll product in two to three years, its co-founder said.

Notably, even though it has already raised capital, BrioHR intends to take part in Y Combinator’s demo day. Croc said it is taking part for optionality. TechCrunch read that as the company isn’t actively looking to raise more capital at the moment, but wouldn’t turn down another convertible note at a comfortable cap. Then again, what company at any demo day would?

Since launching out of its early-adopter program, Croc said that the company has grown 10x. That’s not hard from a small base, so the company’s 2021 growth will be more illustrative of its true near-term potential. Let’s see what new metrics it breaks out in a few weeks’ time.

BrioHR raises $1.3M ahead of Y Combinator’s demo day

As the next Y Combinator demo day approaches, more startups from the current Winter 2021 batch are showing up in our inboxes. One of the most interesting from the mix is BrioHR, which is building human resources (HR) software for Southeast Asia.

The company fits into a theme I’ve noticed amongst startups, namely a focus on taking proven software genre approaches to specific parts of the world, localizing them and building in-region winners. This theme is not new, of course, but it does feel slightly more pronounced amongst recent accelerator batches than before (TechCrunch covers Techstars, Y Combinator, 500 Startups and other accelerators as part of our startup focus). Perhaps this is the impact of so many accelerators going virtual, widening the founder pool from whom they might matriculate to include a more global group of founders.

Back to BrioHR itself, the company is announcing $1.3 million in fundraising, inclusive of its YC check. The investment was led by Global Founders Capital, and saw participation from East Ventures and angel investors.

TechCrunch caught up with Benjamin Croc, the company’s co-founder and CEO, who is located in Kuala Lumpur, Malaysia (the city pictured in the image at the top of this post). The time zones were tricky to navigate, but the company’s vision was simple enough: A software-as-a-service (SaaS) HR software suite, tailored to fit the laws of the Southeast Asian region.

Croc and his co-founder, Nabil Oudghiri, founded the company in 2018, incorporating in the second half of the year after talking over their idea for a few months. BrioHR did not launch its product until the fourth quarter of 2019, opening for what Croc described as early adopters. The startup launched more broadly in the first quarter of 2020, right in time for COVID-19 to shake up the world.

Its fundraising came in two chunks, one in the middle of 2020 and one that came in the third quarter of the year; the first chunk of the raise was larger than the second. BrioHR raised the capital using a convertible note, with terms that Croc described as near to standard.

In our conversation, TechCrunch was curious about how prevalent SaaS as a model is in Malaysia and the other countries the startups wants to sell into. The co-founder said that while SaaS is not as well known in his part of the world as it is in the United States — not a huge surprise given that the U.S. is the largest SaaS market in the world — he praised the speed at which Southeast Asian countries adopt business trends; if Croc is right, his view could point to a very active subscription software market in the region in coming years.

BrioHR competes with local companies that are more focused on providing single solutions, like payroll management. From our discussion, it appears that Croc hopes that by going broad, in a feature sense, BrioHR will surpass legacy competitors. The startup is itself still building out its regional tooling, providing payroll support in only a handful of countries. It intends to expand that service to new countries this year, and be everywhere with its payroll product in two to three years, its co-founder said.

Notably, even though it has already raised capital, BrioHR intends to take part in Y Combinator’s demo day. Croc said it is taking part for optionality. TechCrunch read that as the company isn’t actively looking to raise more capital at the moment, but wouldn’t turn down another convertible note at a comfortable cap. Then again, what company at any demo day would?

Since launching out of its early-adopter program, Croc said that the company has grown 10x. That’s not hard from a small base, so the company’s 2021 growth will be more illustrative of its true near-term potential. Let’s see what new metrics it breaks out in a few weeks’ time.

Martech company Zeta Global raises $222.5M in debt

Zeta Global, the marketing technology company founded by David A. Steinberg and former Apple CEO John Sculley, is announcing an additional $222.5 million in new debt financing.

The company has gone down the debt route before — a Series F raised in 2017 combined $115 million funding with $25 million in debt. BofA Securities served as lead arranger and bookrunner for the new financing, with participation from Barclays, Credit Suisse and Morgan Stanley Senior Funding.

“For this round, we were able to both refinance our debt and add in a large amount of capacity for current operations and future initiatives,” Steinberg (Zeta’s CEO) told me via email. “We were able to work with our syndicate to capture a low interest-rate and take advantage of the strong credit markets.”

The company emphasizes its data-driven approach to marketing, combining companies’ first-party data with artificial intelligence and what it says are more than 2.4 billion customer identifiers. Steinberg said this approach has only become more crucial, with 2020 delivering “a five-year acceleration” as brands face the challenge of “digitally transforming their business structure to be data-centric.”

“Zeta’s capabilities are helping marketers engage customers across the entire digital ecosystem more intelligently and efficiently, with individualized messages, offers, and content by way of our identity-based data and predictive AI,” Steinberg continued. “Our challenge is to continue to keep up with our customers’ needs and maintain our competitive advantage around data and AI.”

The company’s funding announcement notes that previous loans have been used to finance acquisitions and integrations, including commenting platform Disqus and machine learning-powered marketing platform Boomtrain. Asked whether this new debt will also be used for acquisitions, Steinberg said the company continues to “organically innovate,” with a focus on its customer data platform and connected TV capabilities.

Early Stage is the premiere ‘how-to’ event for startup entrepreneurs and investors. You’ll hear first-hand how some of the most successful founders and VCs build their businesses, raise money and manage their portfolios. We’ll cover every aspect of company-building: Fundraising, recruiting, sales, legal, PR, marketing and brand building. Each session also has audience participation built-in – there’s ample time included in each for audience questions and discussion.

Equity Monday: More venture money for Europe, and public companies blast off

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast where we unpack the numbers behind the headlines.

This is Equity Monday, our weekly kickoff that tracks the latest private market news, talks about the coming week, digs into some recent funding rounds and mulls over a larger theme or narrative from the private markets. You can follow the show on Twitter here and myself here — and be sure to check out our most recent Friday episode, which featured news on Finix and Coinbase and Reddit, among others.

(Also don’t forget that Equity is growing! And TechCrunch events are about to kick off and kick some butt.)

Here’s what we got into this fine Monday morning:

Equity drops every Monday at 7:00 a.m. PST, Wednesday, and Friday at 6:00 AM PST, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts!


Early Stage is the premiere ‘how-to’ event for startup entrepreneurs and investors. You’ll hear first-hand how some of the most successful founders and VCs build their businesses, raise money and manage their portfolios. We’ll cover every aspect of company-building: Fundraising, recruiting, sales, legal, PR, marketing and brand building. Each session also has audience participation built-in – there’s ample time included in each for audience questions and discussion.

Australia-based Employment Hero raises $45M AUD for its global expansion

A photo of Ben Thompson, co-founder and chief executive officer of human resources platform Employment Hero

Ben Thompson, co-founder and chief executive officer of human resources platform Employment Hero

Businesses, and the tech platforms that support their operations, had to adapt quickly to the pandemic. Ben Thompson, co-founder and chief executive officer of human resources platform Employment Hero told TechCrunch that “COVID-19 accelerated the adoption of employment management software by roughly five years,” as teams adjusted to remote work.

The Sydney, Australia-based company announced today it has raised a $45 million AUD (about $34.8 million) Series D, bringing its valuation to more than $250 million AUD ($193.4 million USD). The capital will be used for expansion and growth in markets including New Zealand, Southeast Asia and the United Kingdom.

The round was led by SEEK, which runs job platforms around the world, with participation from OneVentures and AirTreeVentures, all returning investors. Employment Hero also added Salesforce Ventures as a new investor.

Employment Hero is designed for small-to-medium sized businesses, and combines human resources, payroll and benefits features. It currently serves about 6,000 SMEs with a combined total of more than 250,000 employees. Employment Hero doubled the number of its full-time employees to 200 last year, and launched versions in New Zealand, the UK, Malaysia and Singapore. Its Series D will be used to support growth in those markets, and enter new Southeast Asian countries, including Thailand, Vietnam, Indonesia and the Philippines.

Localized versions of Employment Hero include pre-built employment contracts and policies that comply with local laws. In Malaysia and Singapore, the platform provided research on recruitment and employment trends, Thompson said, and in Singapore, it gathered COVID-related government support materials into one factsheet.

Employment Hero also renewed its partnership with SEEK, which means the platform includes SEEK job ads in Southeast Asia.

During the pandemic, the company launched a new service called Global Teams for remote work. It serves as a professional employer organization (PEO), enabling companies to recruit new remote employees around the world and automating regional compliance paperwork. Global Teams is integrated into the main Employment Hero platform, so remote employees have access to the same resources as their colleagues.

 

About 75% of Employment Hero’s customer base upgraded their subscriptions to include tools for remote work management, compliance and employee wellness services.

For example, during the first week of Australia’s nationwide lockdown, Employment Hero launched a COVID-19 resource hub, including tools for the government’s JobKeeper payment scheme and employee wellness surveys. It also ran biweekly webinars with industry experts about employees’ rights to leave and pay, mental health and employee assistance programs, cashflow management, employer duty of care for remote work arrangements and live employment law.

As remote work continued, Employment Hero also introduced engagement and productivity features, like one-on-one coaching and other tools to improve communication and feedback.

“As a company, we knew we had to do whatever it took to help our clients and the wider small and medium-sized business community through COVID-19,” said Thompson.

Klarna confirms new $31B valuation

Klarna, the Swedish buy now, pay later behemoth and upstart bank, has raised $1 billion in new funding at a post-money valuation of $31 billion. That sees the company retain the crown as the highest valued private fintech in Europe.

Backers of this round are said to be combination of new and existing investors, while Klarna claims it was 4 times oversubscribed. That’s likely prompted by reports the company is eyeing up a direct public listing and the current appetite for public tech stocks in general.

As a reference point, Affirm, which is viewed in the U.S. as one of Klarna’s most direct competitors, recently IPO’d. If you want further data points, read Alex’s Extra Crunch analysis of Klarna, Affirm and AfterPay’s most recent earnings.

In addition to confirming the new fund raise — which had been widely leaked given that there dozens of frenzied investors involved — Klarna is also announcing that the company will pledge 1% of the capital raised to a newly created initiative that focuses on “key sustainability challenges around the world”. The initiative will be formally launched April 22 on World Earth Day.

A very early mover in what is now widely called buy-now-pay-later (BNPL), Klarna has been built on the concept of giving consumers a way to buy things online without having to pay for them upfront, and without resorting to a credit card. It does this both by offering online retailer integrations where Klarna appears as an option at check out, and through its own “shopping mall” app, where users can browse all the stores that let you pay with Klarna.

On the back of this, the company hopes to foster a bigger financial relationship with its users as a fully-fledged challenger bank. It has a range of licensed banking services, such as savings and current accounts, in Sweden and Germany, with more countries to follow.

On the BNPL front, Klarna is active in over 17 countries, and has over 250,000 retail partners including Macys, H&M, IKEA, Expedia Group, Samsung, ASOS, Peloton, Abercrombie & Fitch, Nike and AliExpress.

The fintech has been backed by Sequoia Capital since 2010. More recent investors include Dragoneer, Bestseller Group, Permira, Visa, Atomico, Ant Group, Commonwealth Bank of Australia, Silver Lake, HMI Capital, TCV, Northzone, GIC (Singapore’s sovereign wealth fund) and funds and accounts managed by BlackRock.

Meanwhile, Klarna was founded all the way back in 2005 and has a fascinating story from startup to scale-up — a story that almost certainly has a few more twists and turns yet. If you need to catch up, check out this 8,000 word opus on the company for Extra Crunch.

How investors are valuing the pandemic

Welcome back to The TechCrunch Exchange, a weekly startups-and-markets newsletter. It’s broadly based on the daily column that appears on Extra Crunch, but free, and made for your weekend reading. Want it in your inbox every Saturday morning? Sign up here.

Ready? Let’s talk money, startups and spicy IPO rumors.

Kicking off with a tiny bit of housekeeping: Equity is now doing more stuff. And TechCrunch has its Justice and Early-Stage events coming up. I am interviewing the CRO of Zoom for the latter. And The Exchange itself has some long-overdue stuff coming next week, including $50M and $100M ARR updates (Druva, etc.), a peek at consumption based pricing vs. traditional SaaS models (featuring Fastly, Appian, BigCommerce CEOs, etc.), and more. Woo! 

This week both DoorDash and Airbnb reported earnings for the first time as public companies, marking their real graduation into the ranks of the exited unicorns. We’re keeping our usual eye on the earnings cycle, quietly, but today we have some learnings for the startup world.

Some basics will help us get started. DoorDash beat growth expectations in Q4, reporting revenue of $970 million versus an expected $938 million. The gap between the two likely comes partially from how new the DoorDash stock is, and the pandemic making it difficult to forecast. Despite the outsized growth, DoorDash shares initially fell sharply after the report, though they largely recovered on Friday.

Why the initial dip? I reckon the company’s net loss was larger than investors hoped — though a large GAAP deficit is standard for first quarters post-debut. That concern might have been tempered by the company’s earnings call, which included a note from the company’s CFO that it is “seeing acceleration in January relative to our order growth in December as well as in Q4.” That’s encouraging. On the flip side, the company’s CFO did say “starting from Q2 onwards, we’re going to see a reversion toward pre-COVID behavior within the customer base.”

Takeaway: Big companies are anticipating a return to pre-COVID behavior, just not quite yet. Firms that benefited from COVID-19 are being heavily scrutinized. And they expect tailwinds to fade as the year progresses.

And then there’s Airbnb, which is up around 16% today. Why? It beat revenue expectations, while also losing lots of money. Airbnb’s net loss in Q4 2020 was more than 10x DoorDash’s own. So why did Airbnb get a bump while DoorDash got dinged? Its large revenue beat ($859 million, instead of an expected $748 million), and potential for future growth; investors are expecting that Airbnb’s current besting of expectations will lead to even more growth down the road.

Takeaway: Provided that you have a good story to tell regarding future growth, investors are still willing to accept sharp losses; the growth trade is alive, then, even as companies that may have already received a boost endure increased scrutiny.

For startups, valuation pressure or lift could come down to which side of the pandemic they are on; are they on the tail end of their tailwind (remote-work focused SaaS, perhaps?), or on the ascent (restaurant tech, maybe?). Something to chew on before you raise.

Market Notes

It was one blistering week for funding rounds. Crunchbase News, my former journalistic home, has a great piece out on just how many massive rounds we’re seeing so far this year. But even one or two steps down in scale, funding activity was super busy.

A few rounds that I could not get to this week that caught my eye included a $90 million round for Terminus (ABM-focused GTM juicer, I suppose), Anchorage’s $80 million Series C (cryptostorage for big money), and Foxtrot Market’s $42 million Series B (rapid delivery of yuppie and zoomer essentials).

Sitting here now, finally writing a tidbit about each, I am reminded at the sheer breadth of the tech market. Termius helps other companies sell, Anchorage wants to keep your ETH safe, while Foxtrot wants to help you replenish your breakfast rosé stock before you have to endure a dry morning. What a mix. And each must be generating venture-acceptable growth, as they have not merely raised more capital but raised rather large rounds for their purported maturity (measured by their listed Series stage, though the moniker can be more canard than guide.)

I jokingly call this little section of the newsletter Market Notes, a jest as how can you possibly note the whole market that we care about? These companies and their recent capital infusions underscore the point.

Various and Sundry

Finally, two notes from earnings calls. The first from Root, which is a head scratcher, and the second from Booking Holdings’ results.

I chatted with Alex Timm, Root Insurance’s CEO this week moments after it dropped numbers. As such I didn’t have much context in the way of investor response to its results. My read was that Root was super capitalized, and has pretty big expansion plans. Timm was upbeat about his company’s improving economics (on a loss ratio and loss-adjusted expenses basis, for the insurtech fans out there), and growth during the pandemic.

But then today its shares are off 16%. Parsing the analyst call, there’s movement in Root’s economic profile (regarding premium-ceding variance over the coming quarters) that make it hard to fully grok its full-year growth from where I sit. But it appears that Root’s business is still molting to a degree that is almost refreshing; the company could have gone public in 2022 with some of its current evolution behind it, but instead it raised a zillion dollars last year and is public now.

Sticking our neck out a bit, despite fellow neo-insurnace player Lemonade’s continued, and impressive valuation run, MetroMile’s stock is also softening, while Root’s has lost more than half its value from its IPO date. If the current repricing of some neo-insurance players continues, we could see some private investment into the space slow. (Fewer things like this?) It’s a possible trend we’ll have eyes on this year.

Next, Booking Holdings, the company that owns Priceline and other travel properties. Given that Booking might have notes regarding the future of business travel — which we care about for clues regarding what could come for remote work and office culture, things that impact everything from startup hub locations to software sales — The Exchange snagged a call slot and dialed the company up.

Booking Holdings’ CEO Glenn Fogel didn’t have a comment as to how his company is trading at all-time highs despite suffering from sharp year-over-year revenue declines. He did note that the pandemic has shaken up expectations for conversations, which could limit short-term business travel in the future for meetings that may now be conducted on video calls. He was bullish on future conference travel (good news for TechCrunch, I suppose), and future travel more generally.

So concerning the jetting perspective, we don’t know anything yet. Booking Holdings is not saying much, perhaps because it just doesn’t know when things will turn around. Fair enough. Perhaps after another three months of vaccine rollout will give us a better window into what a partial return to an old normal could look like.

And to cap off, you can read Apex Holdings’ SPAC presentation here, and Markforged’s here. Also I wrote about the buy-now-pay-later space here, riffed on the Digital Ocean IPO with Ron Miller here, and doodled on Toast’s valuation and the Olo debut here.

Hugs, and have a lovely weekend!

Alex

 

With $62.5M in debt financing, Road Runner Media puts digital ads behind commercial vehicles

If Southern California-based Road Runner Media succeeds, you’ll start seeing a lot more ads while you’re driving.

That’s because the startup is placing digital screens on the backs technicians’ vans, delivery vehicles, buses and other commercial vehicles. Those screens can show both ads and serve as a brake light — according to founder and chairman Randall Lanham, the brake light functionality is required if you’re putting a sign on the back of a vehicle.

“The way we look at it, we are a digital brake light,” Lanham said. Yes, the brake light is showing ads, but “the driver touching the brakes interrupts the ad.” (The sign can also indicate turns, reversing and emergency flashers. You can see a mock-up ad in the image above, and real footage in the video below.)

To pursue this idea, Lanham (who described himself as a “recovering attorney”) enlisted Chris Riley as CEO — Riley’s past experience includes several years as CEO of PesiCo Australia and New Zealand. And the company announced this week that it has secured $62.5 million in debt financing from Baseline Growth Capital.

The idea of putting ads on moving vehicles isn’t new. There are, of course, ads on the tops of taxis, and startups like Firefly are also putting digital signage on top of Ubers and Lyfts. But Riley said Road Runner’s ruggedized, high-resolution LCD screens are very different, due to their size, quality and placement.

“[Taxi-top ads] don’t have the color, the brilliance, the clarity,” he said. “We can run a true video ad on the screen.”

Riley also said the ads can be targeted based on GPS and time of day, and that the company eventually plans to add sensors to collect data on who’s actually seeing the ads.

As for concerns that these big, bright screens might distract drivers, Lanham argued they’re actually attracting driver’s eyes to exactly where they should be, and creating a brake light that’s much harder to ignore.

“Your eyes are affixed on the horizon, which is what the [Department of Transportation] wants — as opposed to on the floor or the radio or directly off to the left or right,” he said. “That’s where your safest driving occurs, when your eyes are up above the dashboard.”

In fact, Lanham said he’s “very passionate” about the company’s mission, which in his view will make roads safer, and is creating a platform that could also be used to spread public service messages.

“We have the ability to retrofit any vehicle and make it safer on the highways,” he added. “I really, truly believe that we will save lives, if we already haven’t.”

The company says it already has 150 screens live in Atlanta, Boulder, Chicago, Dallas and Los Angeles, with plans to launch screens in Philadelphia and Washington, D.C. in March.