European AI Leader
Factorial secures $150M Series D, achieving $2.5B valuation as a leading European AI scale-up.
Spanish HR tech company Factorial has closed a $150 million Series D funding round at a $2.5 billion valuation, making it one of the most valuable tech scale-ups in Europe, PR Newswire reported. The round was led by General Catalyst, which also committed an additional $540 million through its Customer Value Fund — bringing total non-dilutive capital from the firm to $740 million.
CEO and co-founder Jordi Romero called the moment pivotal. "Ten years ago we built Factorial as a SaaS company," he said. "Today we are an AI-first company." The Barcelona-based firm now serves over 16,000 businesses across 90+ countries and surpassed $100 million in annual recurring revenue in late 2025.
General Catalyst's Unusual $540M Non-Dilutive Bet
The most unusual part of this deal is the $540 million Customer Value Fund commitment. This is not standard venture capital. General Catalyst pays Factorial's sales and marketing costs upfront. Factorial then pays it back using cash generated by those specific customers — not by giving up company shares, according to Yahoo Finance.
This model means Factorial's founders and employees keep more ownership. General Catalyst partner Pranav Singhvi said the decision was easy. "Factorial's ability to scale sustainably while staying at the forefront of innovation made this an easy decision," he said, per PR Newswire. This is General Catalyst's first direct equity stake in the company, despite their funding relationship dating back to April 2024.
From Payroll Software to AI Agents: Factorial's Full Reset
Factorial started in 2016 as basic HR software for small businesses — think payroll, time tracking, and hiring tools. It raised $120 million in 2022 and hit a $1 billion valuation. Now, the company says it has completely rebuilt its product around AI agents, per PR Newswire UK.
Co-founder Bernat Farrero announced the launch of "Factorial ONE" — described as "the only AI agent with knowledge of your entire business." Instead of clicking through software menus, users will interact with an AI that can act and make decisions across departments. Factorial says this replaces the need for separate HR and ERP systems entirely.
Barcelona's Biggest Tech Win Fuels European Expansion
Factorial's $2.5 billion valuation puts it in the top 20 most valuable scale-ups in the European Union, according to Yahoo Finance. The company is hiring fast — roughly 50 new employees per week — with a goal of reaching 1,300 total staff. Barcelona is cementing itself as a serious European tech hub on the back of this deal.
Much of the new capital will go toward expanding in Germany, France, and Italy. Factorial grew at roughly 70% year-over-year in revenue and aims to become the dominant AI workforce platform for small and medium businesses across Europe. Germany is the primary target given its large SME economy.
AI Bubble Fears Loom Over the Blockbuster Valuation
Not everyone is cheering. Some financial commentators warn that high AI valuations rely on shaky assumptions and circular funding structures. They argue that $2.5 billion price tags for pre-profit AI platforms may not reflect real market demand, per ADVFN.
General Catalyst pushes back hard on this view. They argue the Customer Value Fund model is self-correcting — if a customer isn't profitable, funding for that segment stops automatically. That built-in discipline, they say, makes Factorial's growth fundamentally different from typical high-burn AI startups. Factorial's $100 million ARR milestone lends some weight to that argument.
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