Young at heart: HR startup HumanForce raises $22.5 million after 17 years of bootstrapping
Gig economy-focused HR startup HumanForce has secured $22.5 million in funding from Silicon Valley VC firm, after 17 years of bootstrapping.
Gig economy-focused HR startup HumanForce has secured $22.5 million in funding, after 17 years of bootstrapping.
Launched in 2002 by founder and managing director Bruce Mackenzie, the Sydney-based startup provides a Software-as-a-Service (SaaS) workforce-management tool designed to help employers manage hours, rostering and payroll data.
However, according to Mackenzie, what sets the startup apart from similar HR tech businesses is a focus on the flexible workforce.
The company has been in the workforce management space for “many years”, he tells StartupSmart.
“Three or four years ago, we pivoted to be more focused on the gig worker,” he adds.
“We realised that we were onto something incredibly big, and a real change agent with the contingent workforce.”
Having bootstrapped since its inception, HumanForce has been through the “normal plateaus” of gradual growth, and now has 114 people on its staff.
For the past five years, it has seen 40% revenue growth year-on-year, Mackenzie says.
“Now we’re going up to the next plateau, and we realised demand was outstripping our ability to supply,” he adds.
The funding, from Silicon Valley-based venture capital firm Accel-KKR, will be used to fuel HumanForce’s growth in North America.
And choosing a US backer was a very conscious decision, Mackenzie says.
“If we were going to do it, we would do it big, with a Silicon Valley, or at least a US-based fund,” he says.
While he considered raising capital in Australia and in the UK, the startup already has a presence in Europe, the UK and Asia.
“We realised our last frontier, and where we would use the most capital, is North America.”
Young at heart
It may not have followed the trajectory of your typical startup, but Mackenzie maintains HumanForce is “a young business at heart”.
It’s been running in relatively high-growth, lean “startup conditions” since the beginning, he says.
“To me, startup is a mentality. It’s not a phase of life or an age of the business or the people involved in it,” he adds.
“Like most startups, cash is the prime driver in the business”
And bootstrapping a business for 17 years is no picnic. The founder has had to worry about where wages are going to come from each fortnight and making sure the business is not running with too much risk, not to mention pivoting to a SaaS model 14 years in.
“We never knew what was coming over the horizon,” Mackenzie says.
The startup’s age also made for some unusual conversations with VCs, he adds.
“They wanted to know ‘why didn’t you get the money 13 or 14 years ago?’” he says.
“We just grew fast enough to keep our heads above water.”
In fact, being an older founder and pitching in Silicon Valley creates an interesting dynamic, Mackenzie says.
“Often you’ll be taking a seat in a coffee shop just after someone else has been pitching there. Potentially someone half your age,” he explains.
“There were certain funds we knew wouldn’t invest in a more mature bootstrapped business. They were more interested in what the ramp up looked like against the cash burn,” he adds.
“We’re a different kettle of fish. It was always interesting to see their reaction to us.”
In fact, Mackenzie and the leadership team pitched to some VCs they knew would have no interest in investing, just for practice.
Then, they embarked on a roadshow of 11 VCs “we knew we wanted to impress”, Mackenzie says.
Dogged determination
Having been in the startup business for such a long time, Mackenzie says it’s easy to give advice to other startups.
“I can tell you exactly what not to do,” he says.
“Stay away from risk, learn how to mitigate it, don’t be scared of it.”
He also stresses that “cash is critical”, and advises startups not to be afraid of the unknown.
“If you continually look at the horizon, it’s not only lonely, it can also be scary,” he says.
“Don’t be fearful.”
But the greatest skill a founder can have is convincing great people to get on board, Mackenzie says.
“They’re usually better than you,” he says.
And once they’re on board, he advises founders to let them do the hiring.
“If you can convince really bright people to join you and then let them go and employ other people it takes the pressure off you,” he says.
Finally, Mackenzie says if he could have done it differently, he probably would have raised capital earlier.
The startup went through three major growth phases, and at those times “it was draining”, he says.
“It would have been smarter to bring capital on then,” he adds.
“There are times when your faith and vision is tested by the marketplace,” Mackenzie says.
“We just had that Australian dogged determination.”
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