By Mauro Orru
BARCELONA--Factorial closed a $150 million funding round that lifted its valuation to $2.5 billion, bringing in fresh capital to expand as artificial intelligence reshapes the business-management software market.
Venture-capital firm General Catalyst-which committed over $700 million so far--led the funding round that also attracted interest from Atomico and Four Rivers. Factorial said it would deploy a significant chunk of capital to expand in Germany.
The company has some 1,700 employees, mostly in Barcelona, but it plans to hire aggressively across sales, marketing, engineering and other roles at its Munich office, which it opened less than a month ago.
"We are doing a big push there since Germany is our best and fastest growing market," Jordi Romero, chief executive and co-founder of Factorial said in an interview. "Germany is the largest economy in Europe. We're focused on Europe, so I think that's just the natural gravitation of a very large market."
"They have very solid businesses, mature companies, maybe not as modern as they could be, that are finding a lot of value in previously our software product and currently our AI agents," he said.
Founded in 2016, Factorial developed a platform for human resources, finance and tech teams, initially banking on a model known as software-as-a-service for which companies charge clients who subscribe to a platform or other service. However, the company has since then pivoted to AI, embedding agents that let clients delegate tasks to AI and complete them autonomously.
Its platform operates on a two-agent model: one agent that essentially represents the organization is responsible for applying the policies a company defines across HR, finance and IT, while the second agent represents employees, helping them with their work.
The HR-software industry is increasingly competitive as AI makes it easy for businesses of all sorts to develop sophisticated tools in areas such as payroll management, talent acquisition and predictive workforce analytics, ratcheting up pressure on companies to continuously innovate.
Factorial is betting that companies want platforms with few specialized AI agents to better oversee their operations as opposed to software suites filled with all sorts of agents. The company said it hoped its approach would allow it to seize a large slice of the business-operations software market that goes well beyond HR.
"I think people are just throwing money at AI for the sake of it and this can create more complexity than the problems it solves," Romero said. "At the end of the day in an organization, there are two very important entities: the people and the company itself."
The software industry has faced tight scrutiny in recent months as some investors questioned whether rapid advancements in AI could one day replace the services for which software-as-a-service, or SaaS, companies charge clients. Major software stocks shed a big chunk of their value earlier this year in a market rout dubbed the 'Saaspocalypse'.
Romero said he was landing in San Francisco when SaaSpocalypse made headlines as he started work on Factorial's fundraise. He said backing from the likes of General Catalyst showed that investors continued to see promise in software companies that are able to innovate.
"I think there are a lot of great software companies that are innovating a ton," Romero said. "I think others are justifiedly not that relevant anymore."
Write to Mauro Orru at mauro.orru@wsj.com
(END) Dow Jones Newswires
June 03, 2026 02:11 ET (06:11 GMT)
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