Small and medium sized businesses are the backbone of economies around the world. They are the main source of job creation globally, accounting for over 95% of firms and 60%-70% of employment but many of these 400 million companies are behind when it comes to digital transformation, making it difficult for them to remain competitive. Spanish scale-up Factorial is out to change that. The company, which has customers in Europe, the U.S. and Latin America, offers SMEs a Cloud -based SaaS solution that can manage hiring, onboarding, payroll management, time off, performance management, internal communications and more.
Factorial specializes in companies with 100 to 300 employees but also works with smaller firms and companies with up to 1000 employees. It says it has worked with over 60.000 companies since it was founded in 2016.
“This is a gamechanger for SMEs,” says Factorial Chief Revenue Officer Bernat Farrero, who co-founded the company with CEO Jordi Romero and Pau Ramon. “Big companies are concentrating power in each sector by using technology. For example, Amazon manages their data to automate decisions. We want to bring the same thing to SMEs.”
“It is a huge market,” says Farrero. “We see our main competition as the status quo.” Many SMEs log their data on paper or in spread sheets or outsource their financials to third parties and can’t access the information when needed. Factorial aims to make company data available to all who need it. “Our software has more similarities with social networks than a management software,” says Farrero. “It is based on the employees and collaborations between employees. It allows anyone who needs to have access to information to communicate and exchange and from there to map their workflow.”
The software is easy to use and requires little training, says Ferraro. The company, which will be present at 4YFN, an annual conference that takes place during Mobile World Congress in Barcelona, is growing fast. Last year it grew from 100 to 450 employees and this year it expects to more than double that. It has raised a total of $100 million.
Competitors include India’s Ant My ERP, a SaaS-based ERP software designed to help SMEs automate their business, HR software companies targeting SMEs such as Germany’s Personio and traditional software vendors like Oracle, SAP and IBM.
There is a growing recognization that SMEs need help to move into the digital age. The World Economic Forum recently launched a report on the topic and is urging SMEs to join its Global Champions program. The University of Munich’s UnternehmerTUM is launching a new pan-European initiative specifically geared towards helping family-owned businesses with their digital transformation and sustainability strategies.
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