Barcelona-based HR tech unicorn Factorial has secured an impressive $120 million non-dilutive investment from General Catalyst, aimed entirely at ramping up its go-to-market (GTM) efforts. This fresh funding will fuel the company’s sales and marketing initiatives as it seeks to strengthen its position in the competitive HR SaaS landscape.
Unlike traditional equity rounds, this capital injection comes from General Catalyst’s Customer Value fund—a unique, non-dilutive financial model. Factorial won’t part with any equity, nor is this a typical venture debt deal. Instead, the repayment will come directly from the gross profits generated by customers acquired through the funding boost.
Riding the Pandemic Momentum: Factorial’s Growth Story
Factorial first gained traction during the COVID-19 pandemic by offering a free version of its all-in-one cloud-based HR platform for small and medium-sized businesses. This strategy paid off, attracting over 60,000 users at the peak of remote work demand.
Soon after, the company transitioned to a paid-only model, which rapidly accelerated its growth. According to CEO and co-founder Jordi Romero, Factorial’s revenue and customer base have grown sixfold in just one year, now boasting 13,000 paying businesses. The new funding is perfectly timed to help the company capitalize on this momentum and expand further.
Timing Matters: Factorial Stays Focused Amid HR Industry Turmoil
Factorial’s funding announcement arrives as the HR tech space faces heightened scrutiny. Competitors Deel and Rippling—two major players in the industry—are currently locked in a high-stakes legal battle. Rippling has accused Deel of corporate espionage, alleging that it hired a spy to steal sensitive information about its customers and sales strategies—claims Deel has firmly denied.
Amid this drama, Factorial is taking proactive steps to protect its reputation. The company has launched an internal review to ensure its operations remain clean and transparent, distancing itself from any questionable industry practices.
A New Funding Model: General Catalyst’s “Customer Value” Strategy
What makes this deal unique is the structure. General Catalyst’s Customer Value fund operates similarly to an equity fund but without taking any ownership. Instead, it offers late-stage or mature companies a capital boost focused solely on scaling their GTM operations—covering sales, marketing, and customer acquisition strategies.
“Unlike debt, Factorial carries no downside risk if the go-to-market plan doesn’t perform as expected. General Catalyst absorbs that risk,” explained Pranav Singhvi, Managing Director at General Catalyst and architect of this innovative fund.
This model provides a growth opportunity without diluting ownership or adding debt pressure. Singhvi added that companies targeted for this funding typically have consistent and proven sales performance—traits Factorial has demonstrated.
Factorial’s Future Plans: No Immediate Equity Round
For now, Factorial is not planning a new equity funding round. Instead, a potential secondary round could be on the horizon, allowing early investors and employees to realize some liquidity.
The latest $120 million brings Factorial’s total borrowing from General Catalyst’s fund to $200 million, following a prior $80 million tranche in April 2024.
General Catalyst, meanwhile, continues to scale its Customer Value model, now managing multi-billion-dollar assets and deploying hundreds of millions monthly into SaaS, fintech, D2C, and gaming ventures. Singhvi predicts that this innovative financing approach will soon become a major pathway for companies seeking to scale without diluting equity.
Factorial Aims to Grow the Right Way
With this strategic boost, Factorial is setting its sights on expanding its customer base and market presence while avoiding the aggressive tactics causing chaos elsewhere in the industry. The company’s focus remains on ethical growth and delivering value to small and medium-sized businesses needing powerful HR solutions.
The fresh funding not only secures Factorial’s growth path but also positions it as a responsible player in the booming HR tech sector—ready to scale while staying clear of controversy.
