Israeli remote workforce management company Connecteam has announced the completion of a $120 million Series C financing round led by Stripes and Insight Partners and with the participation of existing investors Tiger Capital, Eyal Ofer's OG Tech Partners, and Qumra Capital. The entrepreneurs and veteran employees sold shares in the company worth $40 million in a secondary investment.
Connecteam, which was founded in 2013 by CEO Amir Nehemia, and Daniel and Yonatan Nuriel is one of Israel's fastest growing startups and it was chosen by "Globes" last December as the country's second most promising startup of 2021. This latest financing round was completed at a company valuation of $800 million. The company said that it rejected investment offers that would have given it a higher valuation and unicorn status because the entrepreneurs were reluctant to dilute their existing stakes and create a company, which albeit more valuable, would be more difficult to control in the future. While some startups are reportedly struggling to achieve the valuations they seek, this is unlikely to be the case with Connecteam, which is growing rapidly and has a strong position in an expanding market.
Connecteam has developed a 'super-application' - that is to say with many uses for managers and employees in low-tech enterprises like retail and food chains, factories and construction companies. It was set up as an instruction application for enterprises with an intra-organizational chat application added, followed by a work hours tracker, task management software, shift and vacation management, and an announcements interface. In short, it offers managers and employees everything required to stay connected remotely with the office. However, it has almost no competitive advantage with white collar organizations in the finance, tech and government sectors over the enterprise applications of Slack and Microsoft.
Connecteam reports 400% revenue growth over the past year and similar growth in its number of customers. The work force has grown 500% over the past year to 175 with plans to double it to 350.
Among other things, Connecteam's success is predicated on a wide network of smartphones also held by employees with low salaries, low data package prices, technological skills of rank and file employees who are used to using apps like WhatsApp, messenger, Gmail and Apple Pay on a daily basis, the growing entry of young people to management positions, as well as regulations that began to tighten at the start of the Covid pandemic for transferring instructions remotely and ascertaining the location of an employee when sending a message.
A large part of the money now raised will be used for increasing the marketing budget. Connecteam plans spending $30-40 million annually on a range of channels including social media, marketing content, affiliate partnerships, and promoting organizational content. One of its most prominent efforts is to set up a kind of online academy for managing human resources and business management for low-cost companies.
Nevertheless, Connecteam as a market leader, together with rivals like Homebase and Deputy, have a tough task in educating the market. The super-applications market for the likes of restaurants and construction sites is still in its infancy and it is quite possible that the tech giants like Google and Microsoft will enter the fray by developing a rival application or through an acquisition.
Published by Globes, Israel business news - en.globes.co.il - on March 2, 2022.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2022.