Less than two years after relocating its headquarters to Austin from Dallas, ActivTrak has scored a $50 million series B funding round led by California-based venture capital firm Sapphire Ventures.
ActivTrak, which operates legally as Birch Grove Software Inc., develops software that evaluates employee productivity through data aggregation and analytics — a product that has become critical since the onset of the Covid-19 pandemic, with so many people working remotely. The software also tracks sensitive internal information.
“The move toward remote work has triggered companies to rethink how they measure and analyze employee productivity in today's digital workplace,” Nino Marakovic, Sapphire Ventures CEO and managing director, said in a statement. “We're excited to welcome ActivTrak to our portfolio, and to partner with CEO Rita Selvaggi and the team on their mission to improve the way employees, teams, and companies work.”
Marakovic joins the company’s board of directors as part of the deal.
Selvaggi said in a phone interview that the pandemic likely has accelerated by “three to five years” the adoption of workforce analytics.
“We were already seeing the broader adoption of remote work,” she said, “and we were building the product to support that.” The coronavirus, however, “highlighted the need to understand how works get done in the digital world.” That sped up the need for "productivity metrics” like those developed by ActivTrak.
Austin’s Elsewhere Partners also participated in the series B round. The venture capital firm in March 2019 invested $20 million in ActivTrak, helping the software company move its HQ to the Texas capital and build out its Austin team.
As part of that investment, Selvaggi, a veteran of Austin's software sector and an Elsewhere Partners operating adviser, became CEO. Anton Seidler and Herbert Axilrod founded ActivTrak in 2012. It had been bootstrapped until Elsewhere Partners invested in the company — it has raised a total of $77.5 million to date.
Selvaggi said she isn’t ruling out another capital raise in the future, but she believes the company has enough runway for at least “the next couple years.”
Other large funding rounds closed by Austin companies this year have included biopharmaceutical company Shattuck Labs Inc.’s June $118 million series B round, edge-computing startup Vapor IO Inc.’s January $90 million series C round and real estate-tech startup OJO Labs Inc.’s June $62.5 million series D round.
ActivTrak plans to use its fresh capital, in part, “to scale go-to-market activities in sales, marketing, and channels, and expand platform capabilities using [artificial intelligence]-driven analytics to help companies better understand and optimize how digital work gets done,” according to the funding announcement.
Capital will also be invested in product innovation such as “expanded integrations with third-party data sources and technology partners,” according to the announcement.
ActivTrak products provide employers and employees with insight — not big-brother-like “oversight,” Selvaggi likes to underscore — on how workers may do their jobs more productively, efficiently and effectively. But it also supplies a view into how someone can work better.
That last point could entail several things. The company’s software allows, over time, employers and employees to understand what technology tools, for example, improve performance, but also which ones are irrelevant, or impede performance, Selvaggi said. The software even helps employers and employees attain a healthier work-life balance and avoid burnout — a problem that has become more commonplace during the pandemic, without the usual organic work breaks that occur while commuting or eating lunch. The software shows if someone is working too many hours — or, perhaps worse, working too much during off-hours, the CEO said.
ActivTrak boasts more than 8,000 customers and its user base has surpassed 250,000.
The company will be hiring to expand its current staff of 92, Selvaggi said.
The CEO expects ActivTrak’s workforce “to be close to 200 by the end of 2021,” she said. The company will be filling roles on the product team, as well as in software development, sales and marketing. Selvaggi did not rule out the possibility of adding new positions to the company’s executive team during the coming 12 months.
Though the entire company is working remotely due to the pandemic, about 65% of its employees work in positions connected to the Austin office, Selvaggi said. ActivTrak retains its Dallas office, but the CEO emphasized that its staff now consists of people working remotely throughout the country.
ActivTrak’s recurring revenue has grown by more than 200% since March 2019. Selvaggi declined to share revenue figures. The company is not yet profitable, she said, but it could be within a couple of years.
It had revenue of $3 million in 2017, up 315% from 2015, according to Inc.
Working with a commercial real estate broker from Chicago-headquartered Jones Lang LaSalle Inc. (NYSE: JLL), ActivTrak had signed a new lease at its new headquarters location at 1301 South MoPac Expressway in the weeks prior to the onset of the coronavirus. The CEO at the time had anticipated that location would have enough space as the company grew for the next two or three years. Selvaggi said she plans to “hold on to that space.”
Las Vegas-headquartered Time Doctor LLC, Miami-based Teramind Inc. and Seattle-headquartered RescueTime Inc. are among the company’s competitors, according to business-intelligence provider Owler.
But Selvaggi pointed out that ActivTrak’s software goes beyond the “traditional time-tracking tools” used by other businesses in the still emerging workforce analytics sector.
The CEO said burnout among her own colleagues during the pandemic has been the largest unexpected challenge since Covid-19’s emergence. The rapid growth ActivTrak has experienced during that time period “has put more pressure on the team,” she said. “I don’t think anyone realized how fatiguing it would be” to work during the coronavirus.
The company uses its own product to ensure the health and safety of its own staff, Selvaggi said.
Rather than focus on exit strategy, the CEO said she concentrates on “building the best company” possible, building a “company of consequence, as Sapphire likes to say.”
Because the company has expanded during the pandemic, ActivTrak has not had to alter the way it operates, lay off or furlough anyone, or cut costs or shift budget priorities in other areas, Selvaggi said.
