Why we Invested in Hnry
Founders consistently ask me the revenue number they need to hit, or engagement metric they need to demonstrate before EVP is inclined to invest. Typically, my answer talks to growing momentum as more important than point in time numbers, the signs of Product Market Fit, or a confidence that the data-set is going "up and to the right". I often watch my colleagues roll their eyes from across the meeting room as I launch into this common refrain.
Well, to all founders, I have finally have an answer:
cake-level engagement. noun a state of customer satisfaction where, unprompted, multiple users of a product or service hand deliver cake to the registered address of the manufacturer or provider of this product or service: Hnry Management has slashed their afternoon tea budget after their product reached cake-level engagement in Q32019.
I am proud to lead EVP's $1.5m investment into Wellington, NZ based Hnry which marks EVP's second investment into a Kiwi-based company and also our first investment into a startup with cake-level engagement. Yup, it's true, our diligence involved multiple interviews with customers that admitted to gifting the Hnry team tasty, sweet treats - even asking family members and friends to deliver on their behalf.
When one sees cake-level engagement, one typically invests.
The Forgotten Workers
Much has been made about the proliferation of the gig or independent earner economy as the continual emergence of various technology platforms has led to new flexible ways to earn income. In EVP's family of businesses alone, we have pet sitters and dog walkers, cleaners, tradies, designers and couriers that now earn multiple income streams as contractors through marketplace platforms. The traditional 9 to 5 office job continues to be unbundled by both technology solutions that allow for remote work and access to talent on a global scale as well as providing veritable livelihoods to individuals as "employees". This fragmented segment of the workforce continues to grow at 50% YoY - a tailwind difficult to ignore.
Despite this, the self-employed segment remains critically under-serviced as compared to full time employees. For a long time, services, products, technologies and society in general has been skewed towards full-time, permanent staff and has overlooked freelance individuals. At EVP we continue to search for solutions focused on this very large market segment as evidenced in our recent investments in Deputy and Foodbomb (amongst others).
My colleague Sanjiv Kalevar at Battery Ventures recently described the blue collar workforce as "the forgotten workers". He writes:
"For people sitting at our desks and working behind laptops on programs like Microsoft Office, it can be easy to overlook the large, sometimes forgotten, workforce out there in construction, manufacturing, transportation, hospitality, retail and many other multi-billion dollar industries. Indeed, more than 60% of U.S. workers and even more globally fall into these “blue collar” industries.
By and large, these workers have not benefitted much from recent technology improvements available to office-based workers. Hourly and field workers are dealing with much more basic on-the-job challenges, like finding work, getting their jobs done on time and getting paid. These more basic needs can be solved with seemingly simple technologies—software for billing, scheduling, navigation and many other business workflows. These kinds of technologies, unlike AI, don’t automate away workers. Instead, they empower them to be more efficient and productive."
In the same way that office workers of the last decade used Microsoft Office (or more recently Superhuman, Notion, Airtable, Canva - but that's another story), blue collar workers are rapidly adopting a similarly ubiquitous mobile based technology stack. For freelancers, the best in class toolkit or industry-standard has yet to develop and the race to win this market is on.
In the wake of better known cloud accounting software catering to small businesses, an often overlooked function for these independent earner folks remains the financial, tax and admin obligations that are typically intimidating, stressful and confusing. Those already taking advantage of self-employment often struggle to cope, with no single solution providing the comfort and reliability to allow them to simply focus on doing good work for their clients. Tax time evokes a real, visceral fear and a sort of all-encompassing dread! Existing e-tax services have penetration rates of sub 30% and all the freelancers we spoke to almost hung up the phone once we mentioned the dreaded T-word.
Hnry is a pay-as-you-go service that handles all the financial admin of being self-employed. With smart use of technology, Hnry simplifies the world of self-employment for its users, their customers, bookkeepers, the tax office and everyone in between. Hnry customers have their income paid into their own unique Hnry Bank Account. Hnry then automatically calculates, deducts and pays all required taxes in real-time, before instantly passing the remainder to the customer, along with a payslip. Hnry files tax returns, manages business expenses, invoicing, credit control and online payments – essentially providing a single solution to eliminate the administrative pain from independent earning.
The business essentially helps designers, gym instructors, tutors, programmers, tradies, artists and many more shades of independent earners to set, forget and leave the hassle to Hnry. The tool is focused on levelling the playing field in a market that is rapidly growing. No wonder their clients are sending baked goods…
Having got to know James, Claire, Richard and the team over the past few months, we are extremely proud to partner with Hnry and help to accelerate their early momentum, launch into the AU market (and beyond) and most importantly, ensure careful monitoring of the company's extraordinary cake-level engagement.
If you're a freelancer who pays an accountant $000s to complete their taxes, check out Hnry or be in touch directly.