Sora, a startup that provides HR automation software, announced today that it has closed a $14 million Series B round of funding. Two Sigma Ventures was the lead investor, contributing $10 million. Prior investors completed the round.
This round follows Sora's July 2020 seed round of $5.3 million. Elad Gil and the First Round led this investment.
TechCrunch sat down with Laura Del Beccaro, CEO of Sora, to discuss the round. We were interested in why the company was raising capital at this time. The startup had 2.5 years of runway last year and we wanted to know what the company plans to do with that money.
Del Beccaro answered the first question by saying that her company raised its seed funding to validate its market, after it had gained early traction. After a year of careful scaling, her company is ready to accelerate its financial and human growth.
She said that Sora reached an inflection moment sometime in the first half 2020. In other words, the early COVID days. Del Beccaro said that the pandemic had a severe impact on HR departments. With remote employees and the shift to Zoom hiring, it is easy to see why HR staff were struggling during the rapid changes in the labor market.
According to the CEO, startups' growth was faster towards the end 2020. This led to 7x customer growth, and 8x revenue growth, since the seed round.
Let's look at what startups software does to better understand Sora's strong performance during COVID. It allows HR operations teams to collect and sync data across multiple systems. Additionally, it creates standard processes for specific tasks and facilitates collaboration between larger employees or the HR team. Sora allows you to trigger automated emails from HR and centralize HR operations tasks. It can also shuttle data between disparate software tools that are used by larger human resources teams.
According to Del Beccaro the result is a decrease in busywork and repetitive tasks for HR operations teams. This saves time and reduces the likelihood that a task will fall through the cracks. HR operations teams are often responsible for onboarding. It is important not to make mistakes.
TechCrunch was interested in whether Sora could become a hub where employees can interact more widely with HR systems. If the startup already does the work of connecting deeply to HR software, why don't they save time and provide employees with one portal? Del Beccaro stated that her company is becoming a source for truth in the HR world. However, some companies are wary of adding another employee-facing tool.
Ask any employee of a major company about their Okta dashboard or similar to get an explanation if it isn't clear.
Sora stated that it targets companies with 100 or more employees. However, smaller customers who require faster onboarding and offboarding are also good Sora targets. Startup charges per employee managed. There is no limit to the number of processes, as Sora wants HR departments to create as many workflows as possible within its service. Sora believes that the more integrated an organization's HR operations are, the less likely it will churn. Therefore, pricing models make sense.
After a year of good growth, Sora now has 11 employees, almost the same number as it had when it raised its seed round. The startup's growth has allowed it to demonstrate remarkable operating leverage for a company its size. Sora is able to hire twice as many people in the next year, thanks to new funding.
Two Sigma was chosen by Sora to lead the round. According to the CEO, her startup will not be competing against dozens of portfolio companies. More importantly, Del Beccaro praised Frances Schwiep who was the lead of Series A. She told TechCrunch she understood immediately what Sora wanted.
TechCrunch spoke briefly to Schwiep about her investment. Venture capitalist Sora said she had been interested in the HR tech industry for some time. After seeing at her previous gig how much work was done in robotic process automation to employee onboarding/offboarding, Sora saw the direction HR tech was heading. A few macro trends she mentioned are positive for the startup include decreasing average employee tenure, increasing HR work by automating or hand, and a shift to remote work.
We last visited Sora and noticed the no-code elements in its service. These are meant to allow HR operations teams to set up workflows they may want to automate. This setup felt more like a table-stakes than anything to be called out. Technology moves quickly.
We can expect higher revenue figures next time we speak to Sora because it is not a seed stage startup. Let's see what it can do with $14 million.
