Benefits are one of the great oxymorons of full-time employment: the name implies help and advantages, but in a lot of cases, it's hard to know what perks and rewards you might have available to you, much less use them on a regular basis.
Now a startup called Cobee — which has built a platform and an app to make organizing and accessing these a little easier, a payment card (physical or virtual), and an integration with payroll — is today announcing some funding on the heels of seeing strong interest for its services, with revenues growing 3x this year.
The company has raised €40 million ($41 million) in a Series B round of funding co-led by Octopus Ventures and Notion Capital, with participation from previous backers Balderton Capital, Speedinvest and Dila Capital. Cobee is based out of Madrid and its focus currently is on Spain and Portugal, where it has carved out a space providing benefits to companies ranging in size from small businesses to enterprises, with around 800 customers in those countries, including Ogilvy, Booking, Workday, N26, JTI, Job & Talent, Avis, Línea Directa, Michelin, Petronas and Glovo.
It will use the funds to expand to other Spanish- and Portuguese-speaking markets in Latin America, starting with Mexico, as well as to other countries in Southern Europe.
The round brings the total raised by Cobee to around €60 million (including a seed round we covered just before COVID-19 descended on the world). Borja Aranguren -- the CEO who co-founded the company in 2019 with Nacho Travesí -- said in an interview that it is not disclosing its valuation.
But as a rough guide, there have been a number of other startups looking to rethink how to package up and deliver benefits. Swile out of France raised money from SoftBank last year at a $1 billion valuation; Forma out of the U.S. raised $40 million earlier this year; Chicago's HealthJoy raised $60 million last month; Perkbox is making waves in the U.K.; Sodexo is coming at benefits from a position as a giant in hospitality; and Brazil has two benefits startups, Caju and Flash, going head to head with each other, with the latter counting investors like Tiger Global among its backers.
That selection of companies speaks to the wider competitive field for Cobee, as well as the opportunity and the gap in the market.
Benefits and perks together form part of what is meant to attract and retain employees to an organization, but often they also include items that are less optional and just part of what everyone expects or might be required to have from their employer.
For example, in some countries, offices are required by law to provide lunch or vouchers for lunch to employees; in some markets, employers provide optional health insurance while in others, it might be the primary way that insurance is provisioned. Some might offer discounts for various services like gym memberships or shopping with certain retailers. Some will provide discounts on professional training courses while others pay for these, but others offer nothing at all.
All of this has in most cases all been lumped together behind the basic concept of "benefits" but in a way that's not that easy to understand, let alone access, not least because the teams that administer these usually deal with multiple suppliers and systems to provision them.
Cobee's service, investors say, stands out in part because it makes dealing with all of that easy for both employers and employees.
“What’s unique about Cobee, compared to other players in this space, is their flexible platform, capable of being adapted to different company types and different countries with little friction," said Itxaso Del Palacio, partner at Notion, in a statement.
At the front end, Cobee is based around an app that employees use to browse and select whatever benefits they want to use to activate them. In cases where it involves physical commerce or paying for specific items on the spot, they are then issued with a card that can be used to redeem these.
At the back end, these plus whatever benefits are activated without the card (e.g., health insurance plans or training) are calculated and automatically integrated with payroll to come up as monthly deductions on that employee's paycheck. Users can always see a more itemized list of benefits and what they're spending in the app. Cobee currently covers benefit programs for meals, transport, nursery, training, gift cards, rent, life and health insurance, and soon a wider package of wellness options that have increasingly become part of the benefit offer (and expectation) from employers.
The system is effective, in that it's getting used regularly, both around daily mandatory benefits and optional ones, said Aranguren. "Almost every user we have uses Cobee every single month," he said. On average, employees are using their payment cards 10 times per month, a number boosted by the fact that meals and transportation are redeemed with the card. "It's a lot for a monthly user," he said.
While some industries, like tech, have been hit hard with layoffs, the bigger picture for now seems to be that organizations are still hiring and are trying to attract top talent, and also generally trying to keep those who work productive and not frustrated by little things (and bigger things). For as long as that continues, there will be a focus on making benefits something that works, too -- an opening for companies like Cobee.
Nick Sando, a principal at Octopus, estimates that the market size for benefits works out to about $53 billion of business spend.
“Increased competition and mobility in the job market has transformed employee benefits from a 'nice to have' to a 'need to have' talent attraction and retention tool," he said in a statement. "Cobee stands to play a fundamental role in the employee benefits markets by providing both best-in-class service providers and a core platform for HR teams to best manage and distribute these services."