Barcelona-based Factorial, which provides HR software for businesses, is now exploring a new funding round that could significantly increase its valuation.
According to Bloomberg, the company is in early discussions with investors to raise fresh capital that could double its valuation to around $2 billion. People familiar with the matter said the startup could raise to $200 million, though the size of the round and final valuation have not yet been decided.
Last year, the company secured a non-dilutive $120 million from General Catalyst (recently invested in Deel and Emidat) to boost its HR sales and marketing.
Factorial’s potential funding round comes as investors continue to back software platforms that help businesses automate HR processes and manage growing workforces more efficiently.
HR platform used by growing businesses
Founded in 2016, Factorial develops software that helps companies manage tasks such as employee leave, payroll, recruitment and training through a single platform.
The company was last valued at $1 billion in 2022, making the potential new funding round a major step up for the startup.
Factorial said it reached $100 million in annual recurring revenue (ARR) in September, a milestone often used by software companies to measure customer growth and stability.
If the funding round goes ahead at the reported valuation, Factorial would become one of the most valuable startups in Spain.
Competition is intensifying in HR software
The HR technology market has become increasingly competitive as companies search for tools to automate administrative tasks and manage employees more efficiently.
According to the report, demand for HR software surged during the COVID-19 pandemic, when many companies moved to remote work and needed better tools to manage distributed teams. The sector is also evolving as artificial intelligence tools begin to handle routine administrative tasks that were previously handled manually.
Several major startups are competing in this space. Companies such as Deel and Rippling have grown rapidly, although the two firms are currently involved in a legal dispute after Rippling accused Deel of corporate espionage, while Deel filed a separate lawsuit alleging defamation.
