ERIN Technologies Inc., a North Shore-based startup that offers an employee referral platform for businesses and organizations, announced the raise of a $5 million funding round.
It's the company's first major financial investment since its initial founding in 2018. ERIN, short for Employee Referral Invitation Network, is planning to use the funds to grow its products, customers and workforce in the year ahead.
Reformation Partners, a New York-based early growth equity firm, led the round. Wexford-based BlueTree Venture Capital also joined in the round as well as Butler-based investment firm Grouse Ridge Capital, angel investor Yoshimi Iyadomi and existing investor LabCo NYC.
Mike Stafiej, the company's founder and CEO, said it's been "an interesting time to raise" amid the tech-driven downturn that has been seen across the country over the better part of this year, which has also been felt in Pittsburgh: ERIN is one of just a handful of local startup companies that have raised multi-million dollar rounds over the past few months.
Despite this, Stafiej said the company has seen an average 300% growth in revenue year-over-year for the past few years, though he declined to provide a specific sales figure but noted that it has surpassed millions of dollars annually. He said ERIN maintains referral services for employers with a combined employee count of over two million workers around the globe, with the average customer being an organization with 20,000 people on its payroll.
"In every conversation we have [with investors], we're able to show off our success, but everybody kind of has had to tighten up, for lack of a better phrase, so it's been interesting to talk to these funds about investing in us because we are so successful," Stafiej said. "But since everything else is so bad, it just creates another element that we have had to deal with."
By bringing gamification to referrals, ERIN entices employees to find and recruit candidates for open jobs at their workplace by offering various cash and noncash incentives throughout every step of the recruitment process. That's unlike the traditional cash reward that employers often give to employees 90 days after a candidate an employee recommends lands a job at their same employer. ERIN charges an annual subscription fee to employers that use its product, which Stafiej said averages around $40,000 but can go as high as $100,000 per year depending on an employer's workforce size.
But once employees start using ERIN, Stafiej said it's difficult for them to stop, essentially locking the service into the company's overall recruitment efforts. Several customers, like the 800,000-person employer Allied Universal, have renewed licenses for ERIN multiple times over the past several years.
"Once you hit 30% of your employees using [ERIN], how you remove it, how do you justify the overhead you're going to take on but cutting a $50,000 license; it doesn't make sense," Stafiej said. "We're the first time that we get their employees involved in the [referral] process at scale and we are the interface that they use to participate in talent acquisition."
Other named customers that use ERIN include footwear company Crocs Inc., SeaWorld Parks & Entertainment Inc. and fast food giant The Wendy's Co., among others. Stafiej said the startup also provides a white label version of its product to other firms, though he declined to name them on the record citing nondisclosure agreements with these companies.
ERIN employs 17 full-time workers, 16 of whom operate out of its North Shore offices while one resides in California. Stafiej hopes to add 10 more people to the company's payroll by the end of the year and another 25 workers by the end of 2023.
