US-Israel startup Sorbet – which tackles what businesses do with financial risks when employees accumulate paid time off (PTO) – has raised $ 6 million in a seed funding round led by Viola Ventures , with the participation of Global Founders Capital, Meron Capitale.
The paid vacation economy is relatively hidden in the business world, but essentially,
Sorbet takes the burden of this power take-off from employers and then allows employees to spend it. This gives employers much more control over the entire process and the ability to predict its impact on the business.
Sorbet says that in the United States, employees only use 72% of PTO balances, even though that is the most sought-after benefit. But that’s actually 768 million unused days off per year, worth about $ 224 billion. This creates a difficult problem for CFOs and accountants because it creates balance sheet commitments on the company’s books, Sorbet says. If the employee does not use all of his PTO, the employer can end up owing him a lot of money, creating a cash liability on the books of the company. So Sorbet redeems those PTO liabilities from the employees and then loads the cash value of the PTO onto the prepaid credit cards for the employees.
Speaking to me on a call, CEO and Co-Founder Veetahl Eilat-Raichel, said, “We looked at this whole idea of paid time off and discovered this huge, massive market failure and inefficiency around it. way the PTO is constructed. It’s kind of one of those things where at first glance there’s this boring bureaucratic payroll item that turns into a boring balance sheet item. But underneath is a $ 224 billion problem for American businesses… If you think about it, employers borrow money from their employees on the worst possible terms and employees don’t benefit either. So everyone is in pain here.
She said, “Sorbet takes the responsibility on ourselves and so 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, very attractive about our funding. So it allows them to save costs, have full control over their cash flow, and distribute incredible financial benefits to employees at a time when we can all use a little more money right now. “
The Sorbet platform has built the will, he says, to sync with calendars, HR and payroll systems, identify patterns, and then proactively suggest personalized, pre-approved “micro breaks” from 3 at 6 am, “micro vacations” of 1 to 4 days and +1 week of vacation. This, said starting, increases the PTO used by up to 15%.
Employers can constantly renegotiate loan terms with Sorbet, thereby matching future cash flows, hedging against wage increases (wage inflation), and enjoying other benefits.
The co-founders are Eilat-Raichel, who previously worked at L’Oréal and Lockheed Martin, and a FinTech entrepreneur; Eliaz Shapira, co-founder and CPO; and Rami Kasterstein, co-founder and board member.