HR, payroll service firm raises $6M for expansion
Philippine-based human resources and payroll management firm Sprout Solutions has attracted foreign capitalists with compounded addition fresh capitalization of US$6 million.
Sprout Solutions' human resources (HR) and payroll management solutions provider, and a software company that aims to help companies in the Philippines grow through their suite of back-end solutions that address HR, payroll, and recruitment difficulties has recently included foreign firms to participate in its lucrative business, such as Point72 Ventures, a U.S. investment firm who has chosen Sprout to be its first foray into Southeast Asia.
Other participating investors include prominent firms such as Dymon Asia, Next Billion Ventures (NBV), and Endeavor Catalyst. Existing investors, such as local firm Kickstart Ventures and Singapore-based firms Beenext and Wavemaker Partners, took part again after participating in Sprout's late 2017 seed round that raised US$1.6 million.
The software-as-aservice (SaaS) company has introduced end-to-end processing and seamless automation across HR and payroll processes including employee 201 file management, attendance tracking and management, and compliance with government regulations, including automating 21 different payroll-related government forms. To date, Sprout has onboarded hundreds of Philippine-based businesses.
“The perception that the Philippines is a highly demanding investment environment has kept it off the
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radar of traditional Western investors,” said Patrick Gentry, CEO and founder of Sprout Solutions.
Despite years of traditional Western investors shying away from the Philippines due to the challenging political and economic circumstances, Sprout has proven that achieving success as a tech startup is a matter of building a strong foundation of trust, Gentry noted.
“Growing a business in the Philippines from scratch is nothing like in Silicon Valley. The trust barrier here is so high, so you really have to focus on overcoming that obstacle before you start to see any success,” stressed Gentry adding that this development means “you need to have solid business fundamentals and solid revenue streams, but more than that, you have to do the right thing and take care of people before you can establish that trust.”
According to Gentry, the primary driver of the business is all about building trust.
He added that every investment and innovation that the company has made since the beginning has been towards this goal. He attributed the company's successful attraction of investors to this business philosophy.
Sprout represents this new generation of tech startups in the Philippines that have taken a drastically different approach. Whereas in recent years investments were based on selling big ideas or growth stories, investors now require real business plans, actual revenue, a path to profitability and put significant emphasis on being responsible, accountable, and reliable.
We are really lucky to have top-notch Southeast Asia based investors - Kickstart Ventures, Beenext, and Wavemaker Partners - have been a big part of Sprout's success already and continue to play a big part in our growth,” Gentry noted.
The corporate environment in the Philippines is quickly transforming to become much more conducive for new businesses to thrive. Not only is this helping the development of Philippine tech startups, it's also putting the country on the global map for foreign investment interests.
The government is pursuing startup-friendly regulation, such as the Innovative Startup Act and the Ease of Doing Business Act, while new local venture capital groups are starting to appear, such as Aboitiz Equity Ventures (AEV), JG Summit's JG Digital Equity Ventures (JG DEV), and Seaoil's Novel Capital.
“What we're doing is facilitating this massive migration from analog to digital, and this is going to have a huge impact on how Philippine society will function in the future,” revealed Gentry.