Prominent Silicon Valley venture capital firm Sequoia Capital is wading into the near $50-billion employee rewards market with its $24.5-million Series C round of financing of online San Francisco-based company Achievers.
The announcement on Wednesday by the venture capital heavyweight signals a heightened interest in the space that Sequoia partner Alfred Lin said is “highly fragmented” and lacks a dominant player.
“We want to be an investor in the most interesting companies of tomorrow and we felt like this would be a company for the ages,” said Lin, who will take a seat on Achievers’ board of directors.
Sequoia has had a long history in backing technology companies such as Apple and Google.
The round also included previous investors in Boston-based GrandBanks Capital and Toronto, Canada-based firms JLA Ventures and the Ontario Venture Capital Fund.
Achievers has now raised $38-million since CEO Razor Suleman founded the company in 2002 in Toronto. Formerly named I Love Rewards, the company, which has 150 employees, has since expanded to Boston and San Francisco and Mr. Suleman said the latest funding will be put toward hiring in all three markets and extensive marketing of the product.
Mr. Suleman said the employee rewards and recognition industry has shifted away from the traditional model of giving workers gifts in the form of watches at the end of an extended period of service.
Now he said it’s about employers tapping into the more “intrinsic” motivations and ambitions of employees through regular performance and engagement metrics and rewarding them accordingly.
One way it does this is through its “social recognition” platform that tracks and rewards employees with points that can be redeemed for gifts from companies like Apple, Visa and Expedia.
Achievers’ customers range from firms with 500 employees up to Fortune 500 companies such as Deloitte, 3M and Microsoft.
Mr. Suleman said Achievers currently has about 500,000 registered users and has enjoyed more than 100 per cent growth in monthly revenues over the last 12 months.
“It’s a land grab,” said Mr. Suleman on the timing of the latest funding round. “I think we’ve got the best product in the industry.”