Why Sydney startup Flare HR brought on a new co-founder while also raising $7 million in funding

Two years since it was founded, Sydney startup Flare HR has announced its unconventional decision to bring on a new co-founder, at the same time as it closes a successful $7 million funding round led by Westpac Bank’s venture capital fund Reinventure.

The startup offers a cloud-based platform that allows employers to manage HR, employee onboarding, benefits and superannuation, while also allowing employees to become more engaged with their superannuation services.

Co-founder and managing director Jan Pacas describes HR as “the last functional area that hasn’t been digitised” in the workplace, and says Flare HR’s mission is to “make life easier for companies, and give choices to employees around financial services in a very transparent way”.

Reinventure’s participation in this latest funding round adds to the $1.5 million in seed funding the startup raised from the fund last year, according to Pacas. The round also sees Robert Whitfield, former Westpac Bank executive and New South Wales treasury secretary, come on board as an investor, along with other unnamed strategic investors who also contributed to the raise.

The funding will be used to expand the platform’s functionality and release Flare Pay in September, a payroll offering designed to help users achieve full compliance with the federal government’s Single Touch Payroll system.

While Pacas says international expansion is in Flare HR’s future sights, it’s “not a priority in the next 12 months” as the startup aims to consolidate its foothold in the Australian market, where “the market in terms of financial services and HR is huge”.

Since being founded in 2015 and launching its cloud-based platform in 2016, the startup has signed up 120 customers including Sephora, SocietyOne and zipMoney, with 30,000 employees using the platform.

Flare HR itself employs a team of 35, but this growth exposed a crucial gap in its own business — one Flare HR needed to fill with a new co-founder.

Bringing on a new co-founder: when is the right time?

Co-founders are usually with the startup from day one, yet Flare HR’s original founders — Jan Pacas, Colin Mierowsky, Daniel Cohen and Saul Kaplan — made the unconventional decision to bring a fifth founder into the fold as the startup grew and a new skillset was needed.

“We thought in the beginning we were a B2B2B [business to business to business] business, but we are actually a B2B2C [business to business to consumer] business ,” Pacas tells StartupSmart. 

Given this “increased focus on the consumer side” in the business, Flare HR decided on James Windon, co-founder and president of political engagement app Brigade Media and a former mentor at Startmate, to join its founding team.

“James brings an interesting skillset to us that we were missing in the business,” Pacas says.

The startup had been in discussions with Windon for some time before bringing him on in March, Pacas says, and Windon will be responsible for maintaining the consumer-side of the HR business.

While Pacas admits the decision to bring in a new co-founder is “not the most typical thing” for a startup to do, the team “agreed that the role deserved to be called that” because of its seniority and responsibility.

“The combination of skillsets that he brings and responsibilities that he has in the business is why we settled on the title of co-founder,” Pacas explains.

For startups considering bringing on new co-founders or core team members, Pacas says “you’ve got to think hard”and “stick to your purpose and why the company exists” when making this decision, because the success of your startup hinges on your team.

“The first 30 or 35 people we hired, we could call them all co-founders because they make or break the success of the company,” Pacas says.

Flare HR is “very careful in who we choose for each position,” Pacas says, because these team members “go through the highs and lows … we are on the same emotional roller coaster”.

Pacas says the Flare team knew it was time to increase its consumer-focus and bring on a new co-founder to fill this need because of feedback from the market.

“Any startup will keep evolving; as you grow and as you experience client demand, the company continues to evolve. You might then need to amend your business plan based on market needs and customer feedback,” he advises.

“There’s different twists and elements that you discover as you grow that force you to re-prioritise things based on market feedback: I think the beauty if you’re a startup is you can do it much faster than if you’re a corporate.”

Flare plans to use this agility and reflexiveness to further grow its business, and Pacas says the startup wants to have 250,000 users on platform within the next five years.

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