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Sparrow, the employee leave management technology company, announced Tuesday it raised $35 million in Series B funding led by Silver Lake Waterman, bringing the company’s total investment to $64 million as it capitalizes on the growing complexity of workplace leave compliance.
The funding comes as companies grapple with an explosion of state and local leave regulations that have transformed what was once a straightforward HR process into a compliance nightmare. With 14 states now operating paid leave programs and six more considering legislation, distributed workforces face a patchwork of rules that vary not just by state, but by county and city.
“Leave is complicated — and stressful,” explained Deborah Hanus, Sparrow’s CEO and co-founder, in an exclusive interview with VentureBeat. “It touches so many aspects of the company — legal compliance, insurance, state agencies, payroll, HRBPs, managers and employees. Everything is always changing, and no one has the data they need when they need it.”
The problem has intensified dramatically since the pandemic accelerated remote work adoption. What was manageable when employees worked from a single office has become nearly impossible to navigate manually across multiple jurisdictions.
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Revenue jumps 14x as companies scramble for leave management solutions
Sparrow’s growth metrics underscore the urgency companies feel around this problem. The company has grown revenue 14x since raising its Series A in 2021, now serving more than 1,000 customers including OpenAI, Reddit, Chime, and Oura. The platform manages leave for over 500,000 employees and has processed more than 2 million days of leave.
Perhaps most telling is the financial impact: Sparrow has saved customers more than $200 million in payroll costs by ensuring employees receive proper wage replacement from state agencies and insurance providers — money that would otherwise come from company coffers when paperwork errors prevent benefit claims.
“Using Sparrow actually saves our customers money, because the default is people are making mistakes on their paperwork. They’re not getting paid properly, and then usually their employer is making up the difference,” Hanus said.
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