Investment Memo: Pento
I’m happy to announce that we have invested in Pento 🎉
Pento enables smart companies to run their HR in a modern fashion. They help companies and managers get rid of manual work by automating a series of old-school processes, starting with payroll. Their bold vision is to build the fundamental system that SMBs will use to handle all of their people operations in the future. In short: they’re building the world’s first PeopleOS!
I’ve been following Emil and Jonas for a long time. Before we decided to work together we were good personal friends. In a sense, it’s been the most thorough founder due diligence I have ever conducted. At one point, I even labelled them as “the one that got away”. So when the possibility to invest presented itself on a cold night in November over burgers in Copenhagen’s Meatpacking District, I was immediately intrigued. After a month of back and forth, we decided to join the latest round despite being a bit late to the party.
My Conviction About the Team
As stated before, I’ve known the team longer than any of our previous portfolio founders. Since day one I’ve had strong conviction in them making a home run at one point in the career. This belief is rooted in their ability to execute strongly while still being tremendously reflective about their product and market. The guys match each other extremely well with a product-oriented CTO and a strong executor at the head of the company.
After working together for +6 years, Pento is the third company Emil and Jonas has started together. Their previous companies count both a success and failure. However, for the first time, I believe they have found their founder-market fit. Coming to HR-SaaS without prior experience in the sector is normally ill-advised, but I believe this is actually their strong side. They are not biased by the old-school processes which they are trying to transform. Furthermore, it’s a market with a clear problem, where the strongest execution and product will win over time.
The Market: Why Now?
Traditional HR-products has worked roughly in isolation from each other. Dealing with all of these is a nightmare for managers and the future of B2B software is integrations. In the US, we’ve seen incredible growth from next-generation HR companies such as Gusto and Zenefits. To me, this is a signal that the market is ready to move on. However, building an awesome payroll product isn’t the future; employee data is!
For me, the holy grail of HR-software is building products on top of a strong core of employee data. Similar to what companies like Salesforce and Hubspot have done for sales and marketing data, I believe we’ll see a similar revolution in HR. Better than I ever could, Jonas has described his thoughts around this in full here: https://medium.com/@jonasboegh/397c7699571.
Why This Makes Sense for Futuristic.vc
I love investing based on personal conviction and contrarian beliefs. I believe that a lot of people has completely underrated Pento because they’ve seen the company largely as a payroll company in a crowded space. As described above, I do not believe this to be the case at all. Rather, payroll is the heart of modern HR, as almost anything you do here ties back to the paycheck of an employee. On top of this base, you can build endless products.
Furthermore, I really believe that SMBs need this service as the market is currently very underserved. Running a smaller company should be done with agile software and the same possibilities as large enterprises. Things like pension and insurance should be readily available, no matter your size. My hope is that Pento will become one of those household tools like Slack that companies automatically use to start they’re businesses because everything else would just be dumb.
If you’re running a startup and want to take part in the journey, you can sign up for one free month here: https://www.pento.dk/.
This piece was written by Christian Jantzen, founding partner of Futuristic.vc. You can follow my writings here or on twitter @chrjantzen.
Futuristic is an early-stage VC firm based in Copenhagen, investing all over the Nordics. We invest in beautiful minds building epic companies. You are welcome to reach out with comments or feedback at christian@futuristic.vc.
