While Rippling and Deel duke it out in the field and in the courtroom alleging illegal sales and marketing tactics, here’s another way to boost business growth: pick up a massive sum of cash to expand your operations in those areas.

Factorial, the Barcelona-based “unicorn” startup that provides an all-in-one HR platform in the cloud for small and medium businesses, has picked up a non-dilutive (no equity) $120 million from General Catalyst — money it says it will invest in one specific area: “go to market” (or GTM, the umbrella term used for the wider expenses associated with sales and marketing activities). 

Factorial initially cut its teeth in the boom for HR services that came with the social distancing of the Covid-19 pandemic, with a ‘free’ version of the product that went viral and racked up more than 60,000 users. Soon after it went paid-only, and CEO and co-founder Jordi Romero told TechCrunch in an interview that it has seen customers and revenues grow sixfold in the last year, putting the number of paying businesses at 13,000. Factorial will be using the money to take advantage of that momentum. 

Factorial’s news about raising more money to turbocharge its sales and marketing is coming, coincidentally, at a time when HR sales and marketing activities are suddenly in the spotlight — albeit not a particularly glowing one. 

Deel and Rippling, two larger HR startups that have a history of acrimony and aggressive competition against each other, are now in the midst of a major legal showdown, where Rippling is suing Deel, alleging that it worked with a spy to steal intel about customers and sales and marketing strategies. Deel denies the allegations. 

From what we understand, Factorial says it’s running an audit internally to make sure that it also has not had any activity among its ranks that violates company confidentiality and its code of practices. Having the funds to go to market — as Factorial is doing today — is one way to grow a sales funnel, yet unfortunately among SaaS companies, so is poaching and other aggressive tactics to secure talent, leads and strategy.

In any case, Factorial has a window here to use this $120 million to position itself away from the drama and win business. 

To be clear, this money is not an equity investment, nor is it the more classic form of venture debt. The money is coming out of GC’s “Customer Value” fund. It’s effectively a non-dilutive loan (no equity stake involved) that Factorial will pay back from its cashflow — specifically gross profit from customers that GC’s money helped to acquire. 

The money that Factorial has picked up over the years from equity raises — the last round was $120 million at a $1 billion valuation back in 2022 — remains untouched. And although GC gets no equity in the investment, it does set up a relationship that could lead to a future round of funding where it does get equity. 

From what we understand, Factorial is not currently looking to raise a significant primary equity round soon. More likely it will raise a secondary round to give earlier investors and employees some liquidity.

As Jordi Romero, Factorial’s co-founder and CEO, described it, General Catalyst’s Customer Value strategy operates a bit like an equity fund (minus the equity stake). It doles out money from it to a number of startups that want to boost their GTM, and it tracks performance across the portfolio more like equity investing, meaning there is no collateral as you would have in debt. Some in the pool may sink, and some may swim, and that is the bet GC is making. 

“Unlike debt, the company does not have any downside risk as GC bears the downside risk if the go to market investment does not perform,” Pranav Singhvi, the MD at General Catalyst who came up with the idea and runs the fund, told TechCrunch over email. He added that the typical company that gets funds in this way is late-stage or public “that have demonstrated consistency” in sales and marketing. 

Singhvi also talked at length about Customer Value in this podcast in October 2024.

Factorial has now borrowed $200 million from GC under these terms after picking up $80 million under the same terms in April 2024.

Sanghvi said that GC now has assets under management in the range of “10 figures” (that is, billions) from its Customer Value efforts, which have been going for four years now. Typically in a month it deploys hundreds of millions of dollars into SaaS, direct-to-consumer, fintech, gaming ad other companies. “We believe this is a key part of how companies will finance their growth in the future,” he said.