An Israeli startup, Sorbet, announced that they had raised USD 6 Million in the seed fund round on 1st May 2021 as their company is trying to tackle the financial risks as employees paid time off (PTO). The investors in this round were Viola Ventures, Meron Capital and Global Founder.
Although the economics of PTO is secretive in the world of business, Sorbet had taken over this from the employers and had allowed employees to spend it. By this, the employers will be given far more grab on the process and predict its impact on the business.
According to Sorbet, only 72% of PTO is used by employees in the U.S. Even though it’s mostly for benefit, it comes up to 768 million unused days off in a year which is worth USD 224 billion. This creates an intractable problem for the CFOs and the accountants because it creates a liability in the balance sheet on the company’s accounts. An employer may end up owing employees a lot of money if they don’t use their PTOs, and this will create a cash flow liability. So, Sorbet buys PTO liabilities from the employees, then adds the PTO’s value on credit cards for the employees.
About the company –
Sorbet builds aids for the domain of paid time off by AI-generated productivity software. Through this platform, businesses can use curated micro-vacations to encourage, personalize, incentivize, and legitimize employees to take off.
Words from founder-
“We researched this whole idea of paid time off and found this huge, massive market failure and inefficiency around the way that PTO is constructed. It’s one of those things where, on the face of it, there’s this boring bureaucratic payroll item that turns into a boring balance sheet item. But under it is a $224 billion problem for U.S. businesses… If you think about it, employers are borrowing money from their employees at the worst terms possible, and employees aren’t benefitting either. So everyone’s hurting here.” – CEO and co-founder Veetahl Eilat-Raichel.
“Sorbet assumes the liability on ourselves, and so then we can allow the company to control their cash flow and decide when they want to pay us back. They gain a lot of financial value because we can be very attractive on our funding. So it saves costs, it provides them with complete control of their cash flow, and it allows them to give out amazing financial benefits to employees at a time where we can all use some extra cash right now.” – she added.
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