Startup Receives Largest Seed Round for an Israeli Fintech Company
Employees should be rewarded for their paid time off (PTO) days when they haven’t been able to use them, contends Veetahl Eilat-Raichel, the founder & CEO of Sorbet. That was Eilat-Raichel’s incentive for starting Sorbet, a platform that allows employees to convert unused PTO into cash. This corporate objective resonates deeply with investors as well, and Sorbet just announced that it has closed $21M in financing. This development signifies the largest seed round for a Fintech startup in Israel to date. Back in April, the company announced that it had closed a $6M round, which has now been extended by another $15M led by Dovi Frances’ Group 11, along with current investors including: Viola Ventures, Meron Capital and Global Founders Capital.
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Regarding the Sorbet platform, Eilat-Raichel explains that in the US alone, the value of unused PTO equates to $270B. Oftentimes, employees are unable to cash out their PTO until they resign or are fired from their jobs. From employers’ perspectives, the unused PTO value creates a cash flow liability on companies’ balance sheets.
Prior to the COVID-19 pandemic, 28% of PTO in the US remained unused. This issue only intensified when travel restrictions were imposed, and as working from home became the norm in 2020 and 2021. A large number of employees simply weren’t motivated to take time off as they had in pre-pandemic times. As a result, the challenge of managing PTO grew exponentially for employers. This lack of motivation to take time off is expected to persist as many companies have adopted a telecommuting model, pleased with the productivity from work-at-home employees. Even as we now see a light at the end of the tunnel due to vaccinations and a massive decrease in Covid cases, work trends have been impacted and are expected to change from the old norm.
Sorbet integrates into and syncs with existing calendars of employers, as well as HR and payroll systems. Through this method, the platform identifies habits and analyzes time-management patterns. Sorbet then proactively suggests personalized, pre-approved 3-6 hour “Micro Breaks”, 1-4 day “Micro Vacations,” as well as +1 week vacations fitting employees’ personal preferences without disrupting their work.
Through this unique model, Sorbet increases Time Off usage by an average of +15% and can predict the portion of time-off which won’t be used by the employee (and will end-up accruing). Once Sorbet offers to buy out the unusable portion of the employee’s PTO, it is able to refinance liabilities for employers so they can better manage their cash flows, save on financing costs, and increase tax deductions. This results in a logical and quantifiable win for all. Most importantly, at a time when everyone can benefit from extra cash, employers are able to offer their employees an enticing financial reward, without having to bear the burden of a significant cash expense.
Cashed out days are loaded onto a virtual prepaid card which can be used anywhere, unlocking highly curated experiences and activities through brand partnerships. This also allows employees to do anything from upgrading to business class, booking a spa treatment, or simply taking an online course paid directly out of their unused PTO.
Along with its new finance developments, Sorbet is announcing its expansion of operations from the US to Australia, where labor laws allow employees to accrue PTO indefinitely. That is a major challenge for any Australian employer, but something that Sorbet can assist with and bring immense value to.
“At Group 11, we pride ourselves on our unique ability to uncover the unicorns of tomorrow,” said investor Dovi Frances, Founding Partner of Group 11.”Veetahl and the Sorbet team identified a massive market inefficiency hiding in plain sight. With a $270B market opportunity, it was crystal clear to me that this was the time to push forward and not look back.”
Eilat-Raichel elaborated: “It is apparent that we’re in the midst of a tectonic shift in employer-employee dynamics. With inbound global interest exceeding our wildest expectations, I had the incredible privilege of selecting the best investors to help us expand and accelerate. I can think of no better partner than Dovi and the entire Group 11 team to join us, and I’m thrilled and humbled to have them alongside our already stellar group of investors.”