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Last week the company secured $7M funding for product expansion and marketing initiatives
GoCo is a software company that helps organizations streamline their HR operations. The Houston-based company announced that it received $7 million in Series A Funding from ATX Seed Ventures and UpCurve. This round brings the company’s total funding to $12.5 million.
What inspired the creation of this company?
Well, let me tell you a brief two minute story that will help put it all together for you. What’s unique about GoCo for us - Jason, Michael, and myself, the three confounders - is that this is our third company together, so we’ve had two previous companies with a nice story each.
The first company we exited to Zynga (the guys who make FarmVille) in 2011, and the second company did biotech work in Houston, where we were managing about 100 employees upon exiting. We learned a lot about wearing different hats and growing businesses, as well as the realities of how complex HR is and what tools are currently available in this area. I think it was these experiences that really sparked our interest to start something like GoCo.
The story I always tell is, I was Chief Business Officer with about 100 employees, this is my second company, I’m walking out, I’m seeing literally everyone in my department accelerating with some kind of fantastic tool. Our sales team is using Salesforce, our marketing team is using marketing automation tools, our lab is using lab management systems. I then walked up to Josie, our HR, who just seems to be inundated with people work and a workflow that doesn’t make any sense, and on top of all that, you know, we’re trying to hire some of the best talent in the city, and then I’ve got employees coming off the elevator who literally just ordered their groceries on Instacart. They’re walking in to Josie on the first day, and she’s handing them a pile of paperwork, and I’m like, “This is not the way we want our company to be reflected, we want to give people a really fantastic experience of a modern technology company."
We’re entrepreneurs who have “been there and done that” and we just want to go back to fixing something that’s always bugged us around the management of HR and give our employees a more delightful workplace from an administration perspective.
Can you give me a case study to help me understand how GoCo helps HR professionals in their day-to-day work?
A larger-scale example is a school district in Wisconsin. If you think about it, schools probably hire 40 or 50 new teachers every year, and it’s a total mess. Tons of paperwork have to be completed and collected, teachers have to get their benefits, deductions have to be calculated for payroll, and they were looking for a platform that can do all that. What’s great about GoCo is that we do that really well, putting all the HR&benefits in one place, with the promise of easily being able to easily sync with their existent payroll, which is really important for someone like a school district, which has to use a specific payroll system.
We provide an open, flexible platform that can essentially streamline their day-to-day, and in a lot of ways they’re using it like DocuSign for HR. From the second you’re sending out the offer letter to the teacher, to her accepting it online with one click, to the platform immediately taking her to all the relevant employee documents, everything is a few clicks away and is centralized on the employee’s virtual profile. By the time the employee shows up on the first day, you already have everything you need, available in digital form so that it can easily be leveraged and used with all other systems, not to mention that obviously, by doing so, you have a lot of new data that can provide new business insights such as retention and turnover.
A smaller-scale example is a telecommunications company in Chicago with about 35 employees. Leslie was hired to be this company’s office manager without any sort of HR certification. She didn’t even know where to start! She was unsure of what paperwork was needed to be compliant with the law or what kind of retention policy to use. Smaller companies are often challenged because they face the same regulations and headaches as larger firms but don’t have the same HR resources. GoCo basically gave Leslie a playbook to run the A to Z of HR at the telecommunications company.
Who is your target customer?
We’re pretty horizontal, as we’re helping companies as small as 20-30 employees and as large as 500+ employees. We typically don’t work with companies under 20 because there isn’t as much that an eight-man company needs to worry about and there’s less concern about liabilities because the company is simply trying to survive and make it.
How many companies are you guys working with right now?
Right now we have about 6,200 companies on our platform using our software. We have a direct channel and partner channel model. In the direct channel model, companies are signing up directly with GoCo. In the partner channel model, partner channels like health insurance brokers can license our software and give it to their clients. Insurance brokers may put all customer benefits on GoCo, allowing a client to easily manage health insurance enrollments on one platform.
What do companies pay for this and how does the payment system work?
GoCo is a software-as-service product with a more typical paper receipt. This means that payment is based on the number of active W2 employees and a cost per employee per month.
What are you guys planning on doing with the new funds?
I think we’re in a really good spot right now. We have received a lot of positive feedback and our customers are asking for even more extended functionality. This means that we will be hiring more engineers and product team.
But I’d say the majority of our fundraising will be focused on our growth efforts. This means a greater focus on sales and marketing initiatives.
What advice would you share with aspiring entrepreneurs?
*chuckles* All entrepreneurs? That’s a pretty big category
What advice would you share with aspiring entrepreneurs working on software-as-service products?
This probably isn’t too unconventional, but I think starting with the customer experiences incredibly important, especially for SaaS companies. I’ve also mentored on different accelerators and invested as an angel investor, and where I’ve seen entrepreneurs get it wrong is that they think they’ve got a great idea, and they spend an incredible amount of time and effort to actually launch their idea, only to find that their product is way off-mark or is not exactly something someone’s willing to pay for.
A lot of what we were trying to solve was based off us trying to scratch our own itch, as we had seen that HR management was a pain point in our personal businesses. But it was only after designing prototypes, talking to customers, and seeing if they had the same pain points that we were really able to refine our product to create something not only able to solve their pain points but something they would be willing to invest in.
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Joined Vator onSeasoned entrepreneur. Current Founder and CEO of GoCo.io on a mission to simplify and automate HR operations and administrations for SMBs. Previous ventures include, Arpeggi (exited to Gene by Gene) and MarketZero Inc, (acquired by Zynga)