As others in the startup world brace for recession, Austin-based Howdy sees opportunity.
The remote work placement startup on Jan. 10 announced it has added $5 million to a $13 million series A funding round raised in August 2022, raising its valuation by more than 20% in the process. The round was led by Obvious Ventures with participation from Greycroft.
Howdy, which represents a rebranded name for the company, has now raised a total of $21 million. It previously went by Astro, and before that, Austin Software Inc. It now operates legally as Howdy.com Inc.
The company works by hiring high-skilled remote tech workers in Latin American and pairing them with U.S.-based tech firms. Its customers include Austin-based firms such as Workrise, Ojo Labs, Capital Factory and Spot Insurance. Howdy's continued growth offers an example of how nimble startups can bring value into the tech ecosystem, even as companies are reducing headcount and bracing for a potential recession.
Layoffs have recently been announced at tech behemoths such as Amazon and Meta, for instance, but Howdy CEO Jacqueline Samira noted that many laid off tech workers are finding new jobs swiftly.
"There's still so much out there that people need help with," Samira said.
Samira, who is based in Austin, said that huge demand for tech workers over the past couple of years created natural business for Howdy. When recession winds started blowing in the back half of 2022, demand for Howdy's services continued as companies looked to cut costs, she said. One way to do that is to hire outside of the most prominent U.S. tech hubs, where salaries have soared.
"Even though we don't traditionally advertise ourselves as a cost-savings play, at the end of the day we do end up saving [customers] about 20% to 30%," Samira said.
The extended funding round for Howdy came about after Samira declined to accept additional dilution from investors during the startup's August 2022 raise. At the time, Howdy's valuation was $85 million.
"I was like, 'I'll tell you what. You've got a little bit in. If in a couple of months you still think we're doing great and you still want to invest heavily, let's talk about doing something a little bit more meaningful at a better valuation," Samira said.
The strategy netted the company an additional $5 million in funding at a valuation of $105 million.
Founded in 2018, the company just recently hired a head of sales. Previously, all of Howdy's growth came through word of mouth. Still, the startup ended 2022 with annual recurring revenue of about $17 million. The company is now looking to hire in HR, IT and procurement.
Howdy hopes over the next five years to eventually have "over 2000 employees placed at various tech companies throughout the United States," Samira said. That ambition could lead Howdy to new verticals, she added. Some of the most popular requests from customers have been for help hiring accountants and content creators.
Studies show that remote work is being increasingly embraced by businesses. A recent analysis from jobs site Ladders Inc. found that remote jobs accounted for 36% of high-paying professional roles in the third quarter of 2022; up from 18% at the end of 2021. Meanwhile, a study from Clarify Capital suggested that 68% of remote workers would prefer to look for a new job with remote options if required to return to the office in their existing role.
Though its CEO and executive team are based in Austin, Howdy has more than 230 employees across Argentina, Chile, Colombia, Uruguay, Mexico, Peru and the United States. That's because the tech workers Howdy pairs with U.S. companies are technically employed by Howdy. Then, those employment contracts are extended to the U.S. companies looking to hire talent.
"The way that we've designed it is that they pay week-to-week. So there's no startup fees, there's no cancellation fees, there's no recruiting fees, sourcing fees, no upfront costs," Samira said. "We're paying for the MacBook Pro, and we're getting them set up and all of the onboarding costs, and all that fun stuff."
Those costs are amortized over the "lifetime" of the employee, Samira said, and that becomes part of the cost to customers, with weekly payments at a 15% markup.
In return, Howdy endeavors to fully integrate its employees onto its customer's teams. That means getting company swag, joining all the right Slack teams and being present at all-hands meetings.
"What we always try to do is just get better visibility for our engineers from the company side," Samira said. "So how can we get closer? How can we provide more resources so that we can continue to support them in a way that allows them to be core members of the team?"
While the company is currently operating remotely, Samira noted that Howdy has "big aspirations" and plans to do everything from the commercial side of the business in Austin.
"Everybody that's going to be interacting with our customers are all going to be based here," she said. "So we'll need a pretty place to house them."
