WorkHound fundraising round raises $1.5 million of seed capital for expansion

WorkHound fundraising round raises $1.5 million of seed capital for expansion

June 17th, 2019 by Dave Flessner in Business Around the Region

Max Farrell with the company Workhound gives a business pitch at the Dynamo Demo Day event at the Tivoli Theater on Tuesday, Oct. 4, 2016, in Chattanooga, Tenn. 10 logistics startup companies which took part in a 12-week startup accelerator program pitched their plans at the event.

Photo by Doug Strickland /Times Free Press.

Three years after expanding its business to Chattanooga to capitalize on the trucking and logistics industry, WorkHound has raised its first seed capital — a $1.5 million fundraising round from institutions across the country designed to help the growing company expands its staff and services.

Founded in 2015 in Des Moines, Iowa, WorkHound provides a real-time feedback platform for front-line workers and has focused on industries such as trucking, warehousing and hospitality where workers don't sit at desks. As the labor market has tightened and more workers do their tasks remotely, the demand for worker feedback to help retain employees has grown and WorkHound has grown to a dual-office company with anchors in Chattanooga and Des Moines.

Max Farrell, a co-founder and CEO of the company, said Monday the extra capital will, in large part, be used to add to the company's technology team headcount and support its growth into the logistics space and additional industries.

"To date, we've been fortunate to fuel WorkHound growth primarily with our revenues," he said. "But as we eye an aggressive expansion into new industries, as well as building out our transportation and supply chain presence, raising a substantial seed round became imperative for us. This capital will enable us to hire more top-notch talent who will power us into the next phase of our company."

The company has grown 20-fold since 2016 when the startup was included in one of the first Dynamo Fund accelerator programs organized in Chattanooga by the Lamp Post Group. Farrell declined to discuss company revenues or number of customers, but he said there are more than 20,000 workers on the Workhound platform providing feedback to their employers on a regular basis.

"Since we are focused on trucking, Chattanooga as the freight alley in this industry has a density of the supply chain so it just makes sense to be here with our sales and marketing office," he said.

Workforce has 12 employees, including nine at its Chattanooga sales and marketing office and three in Des Moines, Iowa where most of the software is developed. The additional capital will expand that staff in both offices, Farrell said.

The WorkHound platform enables employers to receive instant and anonymous workforce feedback so management can address those matters as part of their employee retention efforts.

"Avoidable turnover is high in these industries because these workers often don't feel respected and they don't feel they have a voice," Farrell said. "The previous options for that had been exit interviews, which is an autopsy after the worker has already decided to leave, or an annual survey, which is too slow for feedback. We know in industries like trucking, hospitality or health care, we know that a driver, a technician or a nurse can be happy on Tuesday, fed up on Wednesday and quit by the end of the week."

Although WorkHound is set up to provide anonymous feedback to an employer from workers, it does allow the worker, when prompted, to disclose their identity and situation when they raise a problem that an employer may be able to immediately address.

"That allows companies to be proactive rather than reactive, so we are seeing lower rates of turnover, which can be very costly to an employer," Farrell said.

As WorkHound grows, company officials said they are looking to roll out additional sectors, such as non-hospital healthcare, that feature large distributed staffs.

"Among other positions, this funding will allow us to aggressively grow our engineering team," said Andrew Kirpalani, a co founder and chief technology officer for WorkHound. "We have strong core talent and are excited to add several experienced developers,. We need more people on our team who consider the word 'average' to be substandard. This capital will allow us to attract and compensate those people appropriately."

The fundraising round was led by San Francisco-based Right Side Capital Management, and included other notable funds such as Cleveland, Ohio-based Comeback Capital.

"We're very excited about WorkHound because employee retention is such a pertinent issue in today's work environment," said David Lambert, managing director of Right Side Capital Management. "Their customers are seeing dramatic reductions in employee turnover, which of course goes straight to their bottom lines."

Contact Dave Flessner at dflessner@timesfrepress.com or at 757-6340.


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