Good morning friends, and welcome back to TechCrunch’s Equity Monday, a short-form audio hit to kickstart your week. Regular Equity episodes still drop Friday morning, so if you’ve listened to the show over the years, don’t worry — we’re not changing the main show.
For folks hunting for our longer-form work, here’s last week’s episode with Danny Crichton and Natasha Mascarenhas, and here’s yesterday’s interview with YC boss Michael Seibel.
Equity Monday is a day late this week as I was off yesterday, but it’s here today and what a mess the world is at the moment. That was a key theme of the show, but not the only thing that we mentioned. Here are some other bits of news that caught our eye:
- GoJek raised $1.2 billion more, a stunning round for this time in the venture cycle.
- HashiCorp raised $175 million at a valuation of more than $5 billion, a huge round at an enormous price in any era, but even more so in today’s market.
- AI startups are being snapped up at record rates, with a record-setting 231 deals in 2019. According to the same data set, the Big Five were buying the most AI startups, along with Intel.
Looking ahead there’s little to anticipate aside from Tencent earnings. So, instead, meet Hourly, a neat company that just raised $7.2 million.
Hourly
Hourly provides a software solution for labor tracking and payroll processing, noting industries like construction, service and light industry on its website. If a company has a workforce that gets paid by the hour (the company’s name is a tip-off), Hourly wants to help them keep tabs on the labor, and help them pay for it.
The startup charges for its tooling on a recurring basis, a regular setup for a modern software product delivered as a service. After paying some modest base prices, time tracking costs $8 per employee per month, while its payroll service costs a bit more at $10 per employee per month. According to Hourly CEO Tom Sagi, the company may bundle the two services in the future and offer a discount of perhaps 20% for companies that buy both.
Time tracking and payroll, however, aren’t the only ways that Hourly generates revenue.
Growth
Hourly also drives top line through its workers’ compensation insurance product, which it refers to as “powered by” itself and “backed by A-rated carriers.” According to Sagi, the company currently generates about half its revenue from workers comp commissions.
That means that Hourly has a two-part SaaS business and a technology-powered insurance business. (Sagi detailed to TechCrunch the ins and outs of worker comp payments, employee classification and more; it’s reasonably complex, perhaps providing the startup with a moat of sorts.) If that sounds pretty impressive for a company that just put together $7.2 million, it is — at least compared to how much other startups seem to get done before a round of that size.
How did Hourly get so far with so little money? The firm bootstrapped, hiring engineers in Colombia — the firm now has 10 staffers in that country, but is headquartered out of Palo Alto — to reduce costs. Keeping its costs low let Hourly avoid outside capital — aside from things like family funding and credit cards — before today. And that means that for its external capital base, the company feels somewhat product-mature.
That maturity is letting it bring on larger clients. According to Sagi, Hourly has been increasingly “appealing to larger companies,” which he clarified to mean firms with 20 people or more. Larger customers means larger contract values, which can mean faster growth.
What else?
Oh just the closing of the unicorn exit window for some time. Aside from distressed sales, what sort of company would want to exit in a time like this? More from the Equity crew soon, hang tight.
Equity drops every Friday at 6:00 am PT, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts.