Many of us at Underscore VC can personally attest to the amount of time, work, and money it takes to get new team members trained – and to keep the great ones around.
But don’t take our word for it. Let’s look at the numbers:
- Approximately 70% of a business’s costs pertain to labor.
- It costs more than $1,000 on average to train a new employee, with companies employing less than 1,000 people typically paying more than larger businesses.
- When an employee leaves the company, it costs the organization about one-third of that employee’s salary to replace the employee.
Even before COVID-19 swept across the world, we were seeing a surge of employees working remotely – In early March of 2020 3.6% of the American workforce worked from home at least half of the week. And now, almost twice as many employees are working from home as at work! And despite the many benefits of working remotely, it can take a toll on employee visibility and engagement.
Tanya Bakalov has experienced these people ops pain points, having managed a largely remote team at her first venture, SevOne – an organization Bakalov successfully exited after building a near $1 billion valuation. Scaling a team to 500+ employees was not without stress, which inspired Tanya to address those concerns with her next venture, HelloTeam – the all-in-one performance management, people analytics, and employee engagement platform.
“HR and People Leaders face a common challenge: building a scalable, unified culture for global teams. In the current climate, having the technology to engage, align, and inspire your workforce, especially in the remote setting, is now a business necessity,” says Tanya Bakalov, CEO at HelloTeam.
The $18 billion employee engagement market is long overdue for some thorough disruption. Given HelloTeam’s enthusiastic customer base, partnerships with industry leaders, determined founder, and potential to impact the future of work, we saw a clear rationale to lead a round of venture funding for HelloTeam. We are proud to back HelloTeam’s $3.5M Seed round alongside Ventureforgood, Osage Venture Partners, Bain Capital Ventures, and VT Technology Ventures.
Why Did Underscore VC Invest in HelloTeam?
HelloTeam is right in Underscore’s wheelhouse – a Core Community sourced Seed stage investment, with a bullish Boston-based founder, and a mission that is aligned to our future of work thesis. Let us elaborate:
An Endorsement from the Core
The opportunity to invest in HelloTeam was surfaced by Bouzha Cookman, a member of the Underscore Core – a group of hundreds of proven entrepreneurs, business builders, and domain experts in Boston and beyond. The Core is a signature aspect of Underscore’s investment sourcing, with ~60% of our portfolio companies to date coming directly from the community. We’re elated when our members connect us to bold entrepreneurs such as Tanya and help us review the investment opportunity.
An Industry Due For New Disruption
This domain is fragmented and noisy. And that’s precisely why we backed HelloTeam, they aggregate the point solutions and customers love the integrated simplicity. The product also strikes a rare balance of equally emphasizing powerful value for HR and ease of use for employees. Normally, HR products are imposed on employees, or teams utilize their own solutions without oversight from HR. However, that is not the case with HelloTeam. All parties spend time with the platform because they get their own value from it.
As a firm continuously encouraging our entrepreneurs to find their “minimum-lovable-product,” we were impressed with just how much Tanya’s customer-obsession has paid off. Customers enjoy using HelloTeam and use it in the same way they would Facebook, but for professional purposes. They’ll message other users, say happy birthday, and virtually high-five each other, all on the same platform they can see org charts, submit peer feedback, and leave suggestions to management.
A Persistent Founder
We look for founders who have experienced the pain they feel compelled to solve for, and Tanya Bakalov lived in the nitty-gritty of human resources as she scaled SevOne. That journey revealed that she’s an operations-oriented force of nature and a Boston entrepreneur in every sense. Having put roots down in Boston with SevOne, she’s excited to be building in this innovation ecosystem yet again, so much so that she’s investing her own capital into HelloTeam. And we’re always proud to be co-investing alongside the founders we partner with.
HelloTeam’s growth is impressive. Recently, they were selected by a notably large leading industry partner after months of evaluating all the market options. Additionally, demand for HelloTeam’s people management platform has surged during the pandemic as companies race to enable a successful remote work model.
As noted by co-investor John Simon, “the speed at which they’re building software,” is paving the way for them to lead the industry. “It’s something that I’ve always found to be a hallmark of successful companies. If your software development and excellence are at a rate that’s five times as fast as anybody else, that’s going to be a huge predictor of long term success. It’s something particularly special about HelloTeam,” Simon said.
What’s Next? Scaling HelloTeam
The new round will be used to drive strategic product enhancements and communications tools to help HelloTeam’s customers respond, recover and thrive during these challenging times. To achieve this goal, HelloTeam is hiring new team members who can support the growth of both new and existing customers, such as Thycotic, iSeatz, 908Devices, and Protocall Services.
Positioned to make a measurable impact in a multi-billion dollar industry, HelloTeam is at the intersection between HR technology and the future of work. We’re excited for the company and its proven founder to give rise to the next generation of HR solutions that meet both employee and HR needs.