Philip Carden (left) and Mike Carden at their central Auckland office. The brothers - who share the CEO role, rotating every three months - have just raised $4m for Joyous. Photo / Jason Oxenham
Philip Carden (left) and Mike Carden at their central Auckland office. The brothers - who share the CEO role, rotating every three months - have just raised $4m for Joyous. Photo / Jason Oxenham
Auckland startup Joyous has raised $4 million in a seed round at a $16m valuation - in one of a series of funding rounds lately that has seen an Australian venture capital firm swoop in (more on that shortly).
The two-year-old company makes employee feedback software - but not the dreaded, lumbering annual review kind where you click boxes on web form after web form.
Instead, it offers cloud-based software that lets an employer take frequent microsurveys via staffer's desktop or phone, no app required.
Joyous is targeting organisations with "thousands of people at arms' length from the mothership but wants to keep them in the conversation".
The startup also offers machine learning, or an AI element, which helps managers sift through tens of thousands of responses per week with what Carden says are easily digestible reports that highlight common trends and themes.
Joyous investor Sam Morgan (left), pictured with Hawke's Bay man Rod Drury. Photo / File
"Everybody talks about 'inclusion'. It's the new corporate buzzword, but few people are actually doing it. We're trying to give workers for large employers a voice," Joyous co-founder and co-CEO Mike Carden says.
"Co-CEO" might sound a bit Green Party, but in this case it's keeping it in the family.
Michael Carden held a senior corporate role with HP's New Zealand operation before founding HR software outfit Sonar6, part-funded by Sam Morgan, which was barely out of the starting blocks before it was bought by US company Cornerstone Ondemand for US$14m in 2012.
When Joyous was on the drawing board, the first thing he did was try to recruit his older brother Philip.
The unsung older Carden is one of New Zealand's most successful engineers. During a 10-year career with Alcatel-Lucent he became a senior vice-president and global head of the Franco-American company's consulting services division that included some 30,000 staff and the famed Bell Labs.
Philip came onboard in February 2017. Today, the Carden brothers share the position of Joyous chief executive on a three-month rotational basis.
The startup has hit the ground running as well, signing up two US-based multinationals, one in telecommunications and one in infrastructure, both using its employee survey software.
It began with a $1m seed round, with Morgan returning (with a 5 per cent holding) and Australia's AirTree Ventures and the local Icehouse Ventures and Flowingly founder Jon Kalaugher all chipping in with 4 per cent stakes.
Michael Carden said he didn't have any pressing plans for a raise this year, but when VCs - particularly the new wave of Aussie VCs that includes AirTree, Blackbird SquarePeg started sniffing around - it was obviously time to make hay.
Mike Carden (left) convinced his older brother (Philip) to return from a top corporate job in Europe to co-found Joyous. Photo / Jason Oxenham
Carden says Joyous was probably too raw for local VC kingpin Movac, but in any case, with AirTree and others queuing, the question was somewhat academic, and Icehouse, Morgan and Kalaugher were flying the local flag in any case.
Joyous initially sought to raise another $1m before upping the bar to $4m at a $16m valuation. The round was way oversubscribed, with expressions of interest totalling $7m, Carden says.
The Cardens took advantage of the generous wiggle room. "Rather than just pro rata like normal and scale everyone, we interviewed each investor, to see if they shared our values and could help. Then made allocations based on those conversations," Carden says.
After the raise the Cardens remain the largest shareholders, with Michael on 31 per cent and Philip 29 per cent.
AirTree has upped its stake to 22 per cent, and Icehouse to 10 per cent, while Kalaugher and Morgan remain on 4 per cent.
Like Morgan - who has now made more money from Xero and Vend that his original Trade Me fortune - Kalaugher has proved something of a dab-hand picking software-as-a-service winners, including Pushpay and CIN7.
He sees Joyous continuing his winning streak.
"Employee experience is a very hot digital transformation topic, especially for large enterprises where employee sentiment management is now a board-level imperative," Kalaugher said.
"Joyous truly has a global opportunity, you don't need many enterprise clients to build a substantial high-value software business."
Michael Carden won't give any financials but says the over-sized interest in the round just closed can be explained by Joyous' success with his first two multinational clients.
He says Joyous has no dedicated sales team, and no plans to use any of its new capital to hire one.
"We're fundamentally investing in engineering. We're not sales-led," he says.
"You build an enterprise software businesses by engineering. The days of building an MVP [minimum viable product] product and a big sales force are gone. We're spending almost all of our money on engineering."
