Hamburg-based Localyze is gearing up to launch in North America in the coming months -- powered by a fresh raise of $35 million in Series B funding that's being announced today, a little over a year after it disclosed a $12 million Series A.
The Series B is led by U.S. VC fund, General Catalyst. Other investors in the round include Visionaries Club, Web Summit Fund and Frontline Ventures, along with Job van der Voort (CEO of Remote) and the founding team at Taxdoo.
Localyze's valuation is not being disclosed -- but we understand it's a middle range, nine-figure sum.
The Y Combinator-backed startup -- which was only founded back in 2018 -- has quickly gained traction for a B2B SaaS platform aimed at employers seeking immigration and relocation logistics support. The startup offers admin automation and digital case management tools (plus some human support, of course) to take the strain out of hiring international talent or managing cross-border staff moves.
Targeting the talent war
Localyze says it's responding to rising demand for increased workplace mobility and working abroad among younger generations -- and the ever fierce war for talent suggests employers that are willing but able to facilitate such moves might have the chance to gain a march on less accommodating competitors.
It also points to the increase in multinational companies as helping to drive global employee mobility. While the pandemic effect that gave a huge boost to flexible and remote working has certainly lingered -- even if some firms are trying to push 'back to the office' mandates.
"I think a lot of companies right now try to find some sort of middle ground where they don't say you can work in every country worldwide," suggests CEO and co-founder Hanna Asmussen, discussing recent trends in employee mobility it's been seeing. "What we've seen with our customer base is that they try to find a middle ground where they say these are the ten countries where we have an office or a hub or whatever and then they allow employee to choose one of those.
"Because the work itself is location independent so it doesn't matter if you work in your office in Berlin or in Madrid or in Lisbon so they actually have more and more of those offers where you can actually temporarily work from abroad where you still have some of the administration work -- especially if you're a non-European citizen. And that's something that we're seeing quite a lot in Europe and that's also going to grow worldwide because a lot of companies naturally have offices [in multiple countries]... So I think actually the middle ground will be an employer being the enabler of also offering employers the chance to work abroad so actually that's why I think COVID-19 is actually an acceleration of the trend."
She points to a collaboration it has had for around a year with Remote, a platform for hiring distributed employees (whose CEO is also an investor in this Series B) -- which involves Localyze taking care of some of the immigration work linked to Remote-powered hires in EMEA.
"This is super interesting and I think that's just the biggest proof point of how well those trends fits together," she suggests.
When we last chatted to Localyze they were reporting 120+ customers. That's now grown more than 3x to well over 400, per Asmussen, with revenue also up 6x since last year. Over this time the startup has expanded into 10 markets across Europe.
And while early adopters of the platform are mostly tech startups -- Localyze names checks the likes of Pleo, Wefox and Remote being among its user roster -- Asmussen says it has been succeeding with a marketing push to "more traditional companies". (Though she confirms uptake is still dominated by tech firms -- saying maybe around a quarter of customers at this point are "non-tech, non-startup".)
"We have a tonne of companies in the engineering space, more traditional retail," she tells TechCrunch. "The next stage would be more global companies -- or either European companies that scale to the U.S. or vice versa.
"And then we now start having conversations with the really big global companies. The plan is really that by 2025 we [will] have a coverage of 50 markets globally and we have all the global hubs covered and can serve the really big companies -- because I think that's where the big volume of employees moving across the world is."
"Long term I do think that the war for talent now is pretty much in every sector so that's something where also for us now knowing that the same product works in other areas also really broadens the targeting that we have," she adds.
Localyze also has its sights on expanding into Asia, too, as it shoots to onboard global firms -- and is planning to add its first countries in the region in 2023 too.
"In the next two years we'll try to get as much global expansion as possible -- because, in terms of customers, typically the next scale of customer they are already in at least 10-15 different countries so I think the U.S. is already getting us to the next stage but then also targeting the first markets in APAC -- probably from mid next year onwards, if everything goes right. That would be the plan."
North American launch
In the nearer term, as Localyze gears up for its U.S. (and Canada) launch, Asmussen says two of the three co-founders will be splitting their time between Europe and the U.S. as they work on building up a local customer network on the other side of the pond for at least the early part of next year -- likely being based in New York.
The U.S. launch itself doesn't have a fixed date yet but she suggests January 2023 is most likely.
To prepare the ground there, Localyze recently bought a San Francisco-based HR firm, called TruePlan -- which was selling a headcount planning product -- but purely as an acquihire to beef up its UX and UI smarts as it seeks to polish the look and feel of its platform for the American market, so a chunk of the Series B funding is going into product dev.
"It was kind of a perfect fit in terms of what we needed," she says of the acquihire. "We knew that now we wanted to double down on product even more -- they have some amazing engineers and also on the design side.
"I think the U.S. -- and U.S. customers -- care more about UX and UI than Europe. I think they also have a different standard... So I think there we knew we had to make a bigger push. I think about two-thirds of the term are on the R&D side and also we got a full U.S. go-to-market team and they sold to HR -- and similar target group to what we would do initially -- and so it kind of was a perfect fit."
"Initially it was slightly scary to do that, kind of a week after we closed the Series B -- but right now I'm super happy that we did it," Asmussen adds.
On the competitive front, she says there are differences in different regions. In Europe it's typically going up against relocation agencies -- which combine the relocation and immigration piece -- whereas, in the U.S., she notes there's tended to be more of a split between those two but also there's more startup competition to contend with (such as startups focused on relocation support services).
"In the U.S. there have been a couple of companies -- Bridge US, they focus more on the software part for HR and then work with immigration lawyers, so they don't automate that much already on the immigration piece which is what we do," she suggests -- while emphasizing that keeping the immigration side in-house is a differentiator for Localyze's approach.
"I do think you need to have control over the [immigration] process to ensure certain quality," she argues, fleshing out how it sees its product standing out. "And also to really reach scale you need to put as much as possible into the product and to really try to focus on a product experience -- so one part of the funding is going to overall expansion but the second big chunk is really for the product piece because I think, long term, that's the only way we can really differentiate ourselves."
But she agrees the next growth phase will "definitely" entail more competition -- adding: "That will be interesting for us."
Asked whether she sees any reason to be concerned about post-pandemic 'return to the office' mandates she says she's not worried.
"I do think everyone will have to settle on a middle ground [on remote working]," she predicts. "Companies that are really strict about it will have some kind of negative impact."