Why we invested in Growrk
Every investor has their own process for deciding when to invest in a startup, and when to pass.
Hustle Fund's process involves a 5-pillar evaluation, where we analyze each of these components of a company:
Today I'm sharing a different example. This company is a B2B business called Growrk
At the end of the analysis, if you think we should have passed, write in and tell me why! I love a friendly debate 😉.
First, what is Growrk?
Growrk is smart IT equipment management for remote teams.
What does that mean? Well, when a company hires a new employee, that employee generally needs a laptop. That laptop needs to have certain software installed on it, like Slack, ClickUp, SuperHuman, Notion, 1Password, etc. It might need anti-virus software, cloud storage, etc.
Then there's the hardware. External monitors, cables, headsets, etc. And when the employee leaves the company, there's the headache of getting all that equipment returned to the business.
For remote teams with employees based all over the world, this is a lot to manage.
Growrk takes care of all of this.
As you can imagine, this company involves a lot of logistics.
Shipping the equipment to Growrk to get the computer set up with the right software. Shipping the equipment to the employee. Tracking the equipment so you know which employee has which items. Handling returns.
The list goes on.
The founder of Growrk is a guy named Carlos Escutia. And his background made him uniquely positioned to solve this problem.
See, prior to starting Growrk, Carlos co-founded a furniture rental company. Through his work with that startup, Carlos learned some hard and valuable lessons in logistics, processes, attention to detail, and unit economics.
AKA the exact things that Growrk needs in order to be successful.
Carlos' background led our team to believe that he was the right leader to solve this problem. Speaking of which...
Hustle Fund invested in Growrk in June of 2021. Covid had taken the world by storm, and remote work culture had already become the norm.
Suddenly companies had global employee bases. Existing employees were relocating, and hiring teams were interviewing candidates based all over the world.
Even as humanity began to imagine a world after Covid, remote work appeared to be here to stay.
And so the problem of getting remote employees set up with the right equipment – often with a specific set of hardware and software requirements – would just get bigger.
Asking an IT manager or office manager of a large company to oversee all of the logistics required to get this equipment set up, delivered on schedule, tracked, and then returned when an employee left the company would be ridiculous. Just typing it all out feels like a full time job.
So our team saw the problem of remote IT support and equipment management as a big one.
When we invested in Growrk, the solution was still quite manual. But the concept was clear.
Carlos's team would intake a company's requirements for their new employee's computer. This would include hardware (laptop, monitor, headset, keyboard, cables, etc.) and software.
The equipment was shipped to the Growrk team, who handled all of the installations.
Then Growrk would ship the equipment to the employee – taking care to consider shipping times, the employee's start date, etc.
There were several elements that Carlos needed to get right to make this business work:
- shipping costs
See, this business has lots of overhead costs: equipment, shipping, fees, packaging, and the employees' time.
The team had to offer pricing low enough to make it worthwhile for their customers to outsource this process... while covering costs and making a profit.
For what it's worth, the company has been cash-flow positive since March 2022.
Pretty much every tech company in the world was a viable customer for Growrk. But their sweet spot was right around Series A or Series B.
At this stage, companies can make decisions quickly, have outgrown their DIY solution, AND have enough capital to reasonably consider outsourcing the work.
Given that pool is quite large, and our belief that retention would be quite high, we believed in the possibility of a 100x outcome.
At the time that Hustle Fund invested, Growrk was earning $30k MRR (monthly recurring revenue).
This is more than we usually see at the pre-seed level, and was a good indicator that Carlos was well on his way to finding product/market fit.
Most companies that we see at Hustle Fund have little to no traction. This is because Hustle Fund is a pre-seed venture fund. By the time a company has meaningful traction, they're no longer pre-seed.
Quite frankly, Carlos' traction is not why we invested in him. We invested in him primarily because:
- he had the right background
- the explosion of remote work culture meant that this problem would only get bigger
- it was not a competitive space, so customer acquisition costs would be relatively low
Where Growrk is today
As of writing this, Growrk is profitable and has over 150 customers, including brands like: Brex, Hims, Dialpad, Clickup, Quora, Calendly, and Typeform.
The company continues to grow with no signs of slowing down... irrespective of the fact that many companies are asking employees to return to the office.