Workstream, Which Makes Texting-Based Hiring Tools, Raises An Additional $60 Million

Just as the VC market began dipping downwards six months ago, HR software startup Workstream experienced a breakthrough. Its hiring tools, which are designed for hourly workers and are powered by text messaging, had steadily attracted business from franchise owners of fast food chains like McDonald’s and Popeyes. But when customers like Ace Hardware, Jiffy Lube, UPS began using the platform to manage their hiring processes, Workstream’s investors took notice.

Now, Workstream has raised an additional $60 million in fresh capital to help it expand to even more industries that employ hourly workers. The five-year-old San Francisco-based startup announced the fundraise Thursday and is calling it an “extension” to the $48 million Series B round it raised in August 2021. Existing investor GGV Capital led the new financing, with participation from other previous backers including Bond Capital, Coatue, CRV and Founders Fund.

The capital came with a valuation uptick to $500 million from $375 million a year ago, even as extension rounds at increased valuations became more rare amid the market downturn. “It’s so obvious that not enough software has been built for hourly workers,” cofounder and CEO Desmond Lim told Forbes . “There is a ton of good software built for people who work in the office—Slack, Zoom, Zapier—but it’s not for the so-called ‘deskless’ workforce.

” Lim should know: He’s been surrounded by hourly workers his whole life. His mother worked as a cleaner and some of his aunts and uncles were vendors of newspapers and eggs in their native Singapore. His father remains to this day a package deliveryman, driving the same routes after four decades on the job.

To pay for his undergraduate degree at Singapore Management University, Lim took the money he saved up tutoring in high school and pooled it with two friends to start a no-frills Thai restaurant where he hired dozens of part-time staffers. For workers like them, Lim believes the existing tools for hiring and HR are no good. Instead of spending the working hours in front of their computers, hourly workers and their managers are likely to only have their phone on hand.

That’s why Workstream’s hiring tools are based around texting. Prospective employees can apply to jobs and correspond with the hiring manager all via text. For the managers, the product expedites hiring and onboarding by automating portions of the process, like automatically texting job applicants to a self-schedule an interview.

It’s all meant to save time spent on hiring for roles that traditionally see higher churn rates than white-collar jobs. “Already, folks are able to source, screen, hire and onboard faster, all through texting, all through their phone,” Lim said. With cofounders Lei Xu and Max Wang, Lim launched Workstream in 2017.

He spent the early months going door to door along the business strips in the Silicon Valley, and was able to secure his first deals from franchise owners at local Jamba Juice and Subway storefronts. Quick service restaurants quickly came to comprise the bulk of Workstream’s customers and in October 2020, it hit its first $1 million in annualized revenue. Sales are now solidly into the “double digit millions,” Lim said, but declined to elaborate further.

The growth comes even as the company has reoriented in recent months to decrease its level of cash burn—it’s now set to reach profitability in 24 to 30 months, he added. While any company that reorients towards profitability naturally does so at expense of revenue growth, Workstream’s growth was buffered by its simultaneous traction beyond the food world. Lim credits this recent success to a combination of word-to-mouth virality among hourly workers and a beefed up sales apparatus his company has built out.

Bringing Ace Hardware, Jiffy Lube and UPS on board were also key to securing a commitment from GGV Capital managing partner Hans Tung to lead the latest investment. Tung, no. 6 on Forbes ’ Midas List , initially wrote a small check into Workstream’s Series A round in 2020.

But while a dozen investors offered term sheets in a span of nine days during Workstream’s last fundraising process in 2021, he opted to sit out. “We felt it made more sense to work with them more before writing a sizable check,” Tung tells Forbes . Now, Tung says Workstream’s customer traction outside of food has demonstrated the startup’s potential.

“Given the reality of what we’re seeing in retail, there’s more jobs that need to be filled and not enough people to fill them,” he said. Lim said the primary impetus of the capital is to expand the sales and marketing team further in order to reach more prospective customers in spaces such as retail, hospitality and healthcare. Workstream currently employs 200 people in total.

“The top thing that keeps me up at night is that, while we’ve done a good job building a strong team, how do we keep trying to build that talent—especially with the quickly changing macro [economic conditions],” he says. .