When we consider job offers, most of us (at least in the office-worker realm) no longer consider paychecks alone. When we join new companies, we consider a suite of ancillary benefits—will our new jobs offer us health insurance? A food allowance? Perhaps we can get a taxi home if we work late, or a stipend if we’re asked to move to a new place? In other words: Workers expect more from their employers, particularly now that the fight for talent has made hiring even more competitive. It’s become quite clear – to attract and retain talent, a firm has to offer a more holistic compensation package than sending a monthly paycheck.
This is especially true in Brazil, where employees are entitled to a minimum set of monthly benefits, which often include vouchers for groceries, meals, and transportation—a requirement of Brazilian labor law and union agreements since the 1970s. However, it has historically been difficult for employees to utilize and access their vouchers; in Brazil, money for these benefits has generally been distributed via pre-paid cards from four large incumbent providers, who together account for around 90-95% of the benefits industry. These decades-old, legacy businesses have an antiquated way of offering benefits. They have built what we view as a rigid and inflexible experience to employees that includes limitations on where their benefits can be used; these incumbents also operate in closed-looped systems where benefits can only be used at a pre-determined set of merchants. Given this structure, employees frequently find themselves carrying around multiple cards for each spend category (supermarkets, restaurants, commuting, etc.).
In fact, according to Battery research, this process is so inefficient that a staggering 40% of employees in Brazil admit to selling their vouchers on illegal secondary markets at steep discounts. While a modern, more-savvy workforce expects more from their employers, the mechanisms by which they may access these additional benefits remain stuck in the past—and as a consequence, many Brazilian employees do not take advantage of the compensation promised to them.
That’s why we could not be more excited to partner with Flash* and co-lead the company’s Series C financing round with our friends at Whale Rock Capital Management. Flash is a next-generation, flexible benefits platform that allows employees the ability to spend their benefits money at any place, at any time. Employees may use Flash to manage their benefits balances and spending in a single app, as well as collect rewards and incentives from firms like Uber and Gympass. In other words, Flash is bringing Brazilian benefits into the twenty-first century, making life easier for both employees and employers.
We are thrilled to be welcoming Ricardo, Pedro, Guilherme, Ademar, and the rest of the Flash crew to the Battery family. The team’s unwavering vision and belief was clear from the day that we met them, and we are pleased to be supporting Flash as the company continues its path to become the one-stop-shop for Brazilian HR and benefits. We are strong believers that Latin America has the potential to produce some of the world’s most innovative technology firms, and we are excited to embark on this long and fruitful journey alongside a brilliant set of entrepreneurs.
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*Denotes a Battery portfolio company. For a full list of all Battery investments, please click here.