Putting software to work

At Frog Capital, we have a proven track record of investing in purpose-led scale-ups that make a positive difference in society. One of the key areas where software continues to do this is the world of work. We have developed a strong focus and expertise in workforce management software and are committed to investing further in the dynamic changes within the modern workplace.

The workforce and the nature of work are undergoing constant transformation, a trend accelerated by the Covid-19 pandemic. As we navigate multiple changes in demographic, such as an ageing workforce and new Gen Z workforce alongside a constrained labour supply, it is imperative to optimise the current workforce and adapt practices to meet the expectations of younger generations, who prioritise wellbeing, balance and job satisfaction. Frog recognises these challenges and is committed to investing in solutions that enhance workplace efficiency and satisfaction.

In the past few years we have invested in businesses like Winningtemp, Modulr and Evotix, who are helping to build a more productive and positive world at work.

Navigating Workforce Trends

In response to the ongoing workplace shifts, employers must be agile, responding to evolving trends and new business requirements. Key trends influencing the workforce include:

• Emergence of New Jobs: In a report published in 2017, Dell predicted that 85% of jobs in 2030 had not yet been created. Fields like Quantum Computing, Climate Change, and Blockchain illustrate the rapid emergence of new industries. We continue to see this with the impact of AI specific roles
• Adoption of Cloud Accounting: The efficiencies driven by cloud accounting are becoming indispensable, prompting widespread adoption of ERP systems and complementary solutions to enhance ERP feature sets
• Globalisation and Collaboration: Again, we can see how international workforces and remote workforces necessitate the adoption of cloud solutions for seamless collaboration
• Continuous Learning and Development: There is an increasing need for continuous upskilling of workforces as the skills of specific roles and industries evolve over time
• Growth of the Gig Economy: The rise of freelancers and consultants reflects a move away from traditional 9-to-5 roles driving the need for more complex and agile work management solutions
• Changing Workforce Habits: Millennials and Gen Z frequently change jobs, driven by a desire to upskill, earn more, and seek promotions. Employers need to understand what is driving churn and job satisfaction to encourage a longer serving workforce
• Enhanced Focus on Wellbeing: Post-Covid, there is a heightened emphasis on mental health and preventing burnout and therefore we can see the impact on benefit platforms and wellbeing solutions

Optimising Workforce Efficiency

Businesses continuously seek ways to drive efficiency across processes and optimise their existing workforce. Frog’s investment in Evotix, a leader in EHS (environmental health and safety) software, is a good demonstration of our focus on creating value for businesses, their customers and wider society in this space. Evotix is helping over 500 companies and their 150,000 employees take a major step up in their Health & Safety operations. With safety and sustainability in its DNA, across strategy, product and the company culture, Evotix grew rapidly, expanded to the US and reached over $20m ARR in the 3 years following Frog’s investment. This resulted in them being acquired by SAI360 Inc. which has brought the benefits of their software to workforces on a global scale, while generating a 3.2x return on Frog’s investment.

Winningtemp is another example that underscores our focus on workforce productivity and efficiency. The science based, AI driven platform not only identifies employee issues but, unlike its competition, is proactive in suggesting mitigating actions to managers. Winningtemp demonstrates tangible benefits to their customers, including a 60% decrease in employee turnover, and a 130% improvement in eNPS within two years of using their platform. These outcomes highlight the significant social and commercial impact of prioritising employee engagement and wellbeing.

Similarly, our investment in Modulr, a leading embedded payments platform, streamlines payroll processes for businesses, ensuring timely and accurate payments, thereby enhancing employee satisfaction and operational efficiency.

Strategic Investment in Workforce Management

At Frog, we categorise workforce management into four broad areas:

1. Talent Acquisition: Encompassing recruitment, candidate management, onboarding, and assessment. These platforms can dramatically reduce the time in identifying and engaging with the best talent for specific roles, as well as streamline both the recruitment and onboarding process. They should be able to help companies filter through candidates which have specific qualifications or who may use the platform for first stage testing
2. Core HR: Providing solutions for recruitment, talent management, payroll, scheduling, analytics, compliance, and benefits. Where HR solutions are integrated, they provide strong oversight over the whole of an organisations’ operations to support HR departments in data-led decision making, reducing the administrative requirement and allowing them to focus on more valuable activities, such as retention and talent management
3. Talent Management: Focusing on employee engagement, analytics, professional development, upskilling, reskilling, performance management, and scheduling. This encompasses all the ways that employees and managers are supported and how companies can help maintain productivity and satisfaction across an organisation to drive commercial return. Alongside employee engagement, talent management ensures managers can support direct reports with learning and development to ensure their skills develop with the needs of the business
4. Payroll and Benefits: Payroll systems that automate and streamline the process of paying employees can create huge efficiencies for finance teams, as well as giving peace of mind for employees by delivering clarity on gross and net pay. As we see the continued focus on mental wellbeing for employees, we see this expand into flexible benefits/wellbeing platforms which allow employees agency in choosing benefits which are a priority to them and their families

What is our thesis?

As part of our commitment to investing in purpose-driven businesses making a positive impact, our focus is on businesses that have many touch points across their customers’ businesses and can demonstrate that they are business critical. For these reasons, we focus on Talent Management, Payroll and Benefits, and Core HR solutions. Frog places equal importance on software that drives business performance through improving efficiency, and have a lasting impact on teams’ skills development and mental well-being.  

Positive Growth Equity

Frog Capital uses the Impact Management Project (IMP) framework to assess the impact of businesses on people and the planet. Workforce management solutions align well with this framework and are well suited to B2B SaaS models that can scale efficiently through enterprise, mid-market, or SME strategies.

The IMP describes impact based on an analysis of five dimensions:

1. Who is being impacted?
2. How much?
3. In what way?
4. Contribution of the organisation, and
5. How significant is the impact over a long period of time?

Software companies within Talent Management, Core HR, and Payroll/Benefits in particular are well positioned to make a positive impact. Our thesis is that Talent Acquisition business models are typically more transactional, i.e. based on individual recruited or onboarded and therefore more capital intensive. Recruitment platforms typically have similar dynamics to marketplaces where the cost of acquiring and serving customers is on the supply and demand side, and therefore LTV/CAC metrics can be challenging to scale where investment is continuously needed across both markets.

Our focus is on scalable platforms targeting SME’s or Enterprise customers whereby unit economics can scale more efficiently.

Operational expertise

As part of Frog’s Scale-Up Methodology, our in-house team of Operating Partners specialise in supporting senior leadership teams building scalable businesses. Our library of podcasts and toolkits, How to Scale, provides invaluable resources for tackling fundamental scaling challenges, such as:

• Building sales machines
• Maintaining sustainable unit economics, and
• Scaling product-market fit

Go to How to Scale for more examples.

Evolving landscape

Software will continue to adapt changing workforce needs and employer skill requirements. Talent Management and Core HR solutions are essential for employers to navigate these changes effectively, and Frog remains dedicated to investing in and supporting strong commercial businesses that drive significant societal value through workforce optimisation. With successful investments in companies like Winningtemp, Modulr, and Evotix, we are looking forward to finding the next generation of businesses driving productivity across Europe and beyond.