Specialist recruitment startup alooba has secured a massive $1.1 million in seed funding, at just a year old and slap bang in the middle of the economic crisis caused by COVID-19.
For founder Tim Freestone, while the virus has derailed his growth plans for now, the funding, from a group of angel investors, is a lifeline giving the startup the runway it needs to survive.
Founded just a year ago, alooba helps employers hire analysts in a more efficient way, using customisable tests and screening tools.
While managing analytics at comparison site HotelsCombined, Freestone had the first-hand experience with the confusing process of hiring for analysis roles.
In some disciplines — accounting or mechanical engineering, for example — candidates have gone down a very specific career path, and it’s clear what skills and qualifications they have and which they don’t, Freestone explains.
In analytics, “it’s completely different”, he says.
“People have come to it from every different background. So you don’t really know what skills someone has as an analyst, and because the field is still so new, that hasn’t even been agreed upon.”
So, when you get a pile of CVs for a role “there’s a huge variance in their quality and their background and their knowledge.”
He started considering solutions, and when HotelsCombined was acquired by Booking.com a year ago, he decided it was time to take the leap and launch alooba.
Freestone launched the MVP in July last year, as a free version to get feedback from the candidates who would be using the platform.
In October, after a few tweaks, the first B2B platform was released.
Since then, the startup has secured a handful of clients, including a big bank, a fintech company, a couple of analytics consulting businesses, and even an online travel company.
Freestone isn’t exactly raking in the big bucks, revenue-wise, he says.
“But it’s enough to prove the point that we’ve got something here. We’re onto something.”
He started to think about how he could accelerate that early growth.
“That’s when I started thinking about raising the seed capital.”
“The timing was astonishing”
Even without the challenging timing, Freestone says alooba’s first raising process has been ‘atypical’.
Most founders talk about how painful the capital-raising process is, and how long it takes, he notes.
“Our experience was not like that at all.”
The investors that backed alooba are people Freestone has known for a long time, and who he’s worked with before, he says.
“This is a really good example of that phrase: ‘dig your well before you’re thirsty’,” he adds.
“That two-way trust that we established over the years, you can’t replicate.”
Initially, the raising process felt unusually easy, Freestone says. He talked the investors through the business, talked about his projected timelines, answered questions.
“It wasn’t really that painful at all,” he adds.
“It happened pretty quickly. We got a decent amount of money and also quite a favourable valuation.”
Then, the economic reality of the coronavirus crisis started to become clear, and the founder was closing his seed round in a completely unprecedented environment.
In fact, the very day the money arrived in alooba’s bank account, Freestone moved back into his mother’s house, in a social-distancing measure.
“The timing was astonishing,” he says.
However, he didn’t see any hesitancy from the investors when it came to closing. A few weeks later, and he says that could have easily been a different story.
“Things changed so quickly with coronavirus,” he says.
One minute it was something happening overseas. The next, it looked like it would have an impact here. The next, “we’re in big trouble”, Freestone says.
“That happened in the space of two weeks. It was those exact two weeks where our shareholders’ agreement had gone out and they had to sign and send the money,” Freestone says.
“It was down to the last few days.”
Of course, while Freestone is counting his lucky stars that he got some cash in the bank just in time, he’s having to re-think his entire strategy. His initial plans for the funding are “out the window completely,” he says.
The main use for the technology is helping businesses hire analysts more efficiently.
As the economic effects of COVID-19 set in, businesses are more likely to be letting people go than hiring. Many companies also have hiring freezes in place.
The startup had “a pretty decent set of leads” in the pipeline, Freestone says. Now, they’re unlikely to come to fruition anytime soon.
“Improving analytics recruitment is not top of mind for anyone,” he says.
First and foremost, people are worrying about their own health and that of the people they love, he notes.
Then, they’re concerned about whether they’re going to be able to continue working, and on the survival of their own businesses.
Needless to say, even analytics leaders are not thinking about how to improve their hiring processes.
“That is just not resonating right now.”
With the $1.1 million in seed funding, Freestone had planned to hire for a sales role and a marketing role. He was also planning to start giving himself a salary.
All of those outgoings have been put on hold.
“Sales are going to be incredibly tough over the next six months,” he says.
However, he is ploughing ahead, “pretty much unabated” on the platform development and content creation plans.
The development team will be building out the enterprise-level software, and Freestone will be churning out content to cover every conceivable area of analytics and creating the questions for tests in each area.
In six months time, or whenever the economy starts to recover, alooba will be ready to hit the ground running, he says.
“Hopefully, at that point, the economy has turned around, and then we can start to really think about the sales and marketing side of things.”
For now, the funding has extended alooba’s runway by at least an extra year, Freestone says.
“Unless we have a great depression, I think we should at least survive … and still really make good progress on the content and development,” he says.
“At the moment, all that matters is having enough cash and not going bankrupt.”
And, he knows he’s one of the lucky ones.
“There’s going to be so many companies that are good companies with good people, good products, good brands. But they’re going to be finished, simply because of a liquidity issue,” he says.
“The last thing I would want to do is run into that problem.”