Factorial raises 150 million dollars and scales to a 2.5 billion valuation

What started ten years ago as an idea by three entrepreneurs in Poblenou has become one of the best-valued scaleups in Europe. Factorial has just closed a funding round of 150 million dollars, with which it sets a goal: to acquire other companies to "accelerate its growth," as explained by Jordi Romero, CEO and co-founder of the company. With the operation, Factorial has reached a valuation of 2.5 billion dollars.

With it, the Barcelona-based company enters the top 20 best-valued companies in the EU. "And it is also one of the best-funded," according to Romero. The company has done so hand in hand with General Catalyst as the main investor, along with other players, such as Atomico and Four Rivers. With the operation, General Catalyst enters the company's capital for the first time, having already been accompanying it through a financing system through which the US company reserved 200 million dollars for Factorial.

With this system —called Customer Value Strategy—, General Catalyst's return is exclusively linked to the value generated by customers acquired with that investment, and is limited to a fixed amount. Thus, it allows Factorial to accelerate its expansion while preserving shareholder capital. Now, General Catalyst not only leads the round, but also contributes an additional 540 million dollars to this model.

With these resources, Factorial has "very solid survival and a lot of capacity to invest and grow." In this context, Romero foresees that "the income statement will not take long; we have the time and we have the scale to be very close." All this, with more than 16,000 clients in 90 countries, with the core in Europe —especially in Spain, Portugal, Germany, France, and Italy—, and also with strength in Latin America and the United Kingdom. In addition, with partners like Microsoft, they reach other markets, far beyond Europe.

It is precisely in Europe where Factorial will focus for the acquisitions with which it intends to continue growing. "Purchases allow us to accelerate the roadmap, incorporating talent and client portfolios. It is a way to accelerate entry into different European markets." Thus, the investment round specifically pursues this goal of ensuring that any growth opportunity for Factorial in this regard already has the necessary funding.

"We didn't need a round to continue; what we wanted was more equity to buy companies. We have been very well financed for two years, one could say with an infinite runway," Romero pointed out. In fact, from the previous round —which took Factorial's valuation to the 1,000 million that made it a unicorn four years ago— the funds raised remain intact, and will be added to the new 150 million for acquisitions. On the horizon —though far off—, Romero has hinted at the possibility of going public, "but we are not working on that; that is still years away."

Factorial not only grows in staff and clients, but also in functionalities: what started as a software focused mainly on human resources now includes tools for all areas of business management, from payroll to expenses, which now takes a new leap with AI. With it, it transitions from a SaaS to "an agent companion for companies, to be not just an information solution, but an action solution," capable of executing tasks through its first agent, Factorial One, launched last year. Now, Factorial is working on a new tool, which will allow "cloning a company's employees" so they can streamline their more automatic tasks and focus on what adds value: "The clone must be an extension and a multiplier of the worker."

Poblebou at its essence

Factorial was born from the entrepreneurial ecosystem of Itnig ten years ago in Poblenou, the same neighborhood where it has opened its new headquarters. However, the new headquarters is already too small, and they are already renting spaces in the surroundings, such as three floors of a nearby building, without leaving the neighborhood where it emerged in 2016.

The space problems are not surprising considering that Factorial is constantly expanding its workforce, with no less than about 50 new employees each week, reaching the current 1,700. Of the total, more than 300 are responsible for developing the product —engineers above all—, while the rest grow in parallel with the business, focused on client acquisition and support.

No matter how much Factorial and its workforce grow, the company will continue to do so in Poblenou, as Romero guarantees: "There is a lot of space to grow, and here we have several workspaces," also with the entrepreneurial community of Itnig, nestled in the heart of 22@: "We have an entire ecosystem set up here."