Determining how to compensate employees can be challenging. As remote work has become common and pay transparency mandates have taken hold, it has become even more so.

Though employee compensation represents one of a business’ biggest expenses, many organizations still use spreadsheets to manage this process and make pay-related decisions on an ad-hoc basis, according to Barley co-founder and CEO Jafar Owainati.

“Even the perception of being paid unfairly is damaging enough to break that trust.”
– Billy Mainguy, Barley

For companies, the stakes associated with getting compensation wrong can be high. Opaque and inequitable approaches to employee pay can impact a firm’s reputation and ability to hire and retain the right workers, which is especially important amid a record-tight labour market and the Great Resignation.

With Toronto-based Barley, Owainati sees an opportunity to help make employee pay decisions more structured and equitable using its compensation management software.

Barley has secured $5.4 million CAD ($4 million USD) to date in previously unannounced seed funding led by Golden Ventures for its newly-launched platform. Union Capital, an investor collective that includes tech leaders at Facebook, Google, Shopify, and Uber, also provided part of this financing.

The startup, which helps companies structure, analyze, and manage employee compensation, targets small-to-medium-sized businesses and mid-market firms like Affinity, Flinks, and Properly in the tech, retail, financial, and professional services sectors.

Barley was founded in 2021 by a pair of repeat Canadian tech entrepreneurs in Loopio co-founder Owainati and CPO Billy Mainguy of Reelhouse.

For his part, Owainati co-founded Toronto request for proposal (RFP) software firm Loopio, serving as the company’s COO and then CRO until October 2020. Mainguy previously founded and led Vancouver-based direct-to-consumer film distribution platform Reelhouse.

This seed round consists of a $2.5 million USD simple agreement for future equity (SAFE) from 2021, and a $1.5 million extension at the same terms that closed in December 2022. Both tranches were led by Toronto-based Golden Ventures, while the extension saw participation from Toronto’s Union Capital.

RELATED: How Loopio went from bootstrapped startup to RFP leader

Owainati told BetaKit that after wrapping up its private beta, Barley opted to secure this December extension “in recognition of market shifts and increased expectations for future funding rounds.” The CEO acknowledged that the bar to raise a Series A round has risen amid the market downturn. “We raised more funds to give Barley the runway to focus on building and driving traction during uncertain times ahead.”

As Mainguy told BetaKit, “even the perception of being paid unfairly is damaging enough to break that trust” between employee and employer, and cause that employee to become less engaged or leave the organization altogether.

A recent November 2022 Gartner report found that only 32 percent of employees surveyed believe their pay is fair, and only 38 percent report that they understand how their pay is determined.

Barley aims to address these issues. Barley’s software streamlines the entire compensation process, enabling companies to create consistent salary ranges, conduct pay equity analyses, and manage salary reviews, while also helping them monitor salary trends.

RELATED: Shopify changes employee compensation model: “being a manager now has no effect on compensation”

In an interview with BetaKit, Golden Ventures founder and managing partner Matt Golden described Owainati and Mainguy as a strong founding team building a “transformative” business in an arena that they are passionate about: compensation.

For Golden, who said he had always wanted to invest in Loopio but missed, “when Jafar and Billy formed to build Barley, it was an obvious one for us.”

Employee compensation has become increasingly complicated in recent years amid new regulations, cultural pressures, and the shift toward remote work.

“There are so many complexities around the issue of compensation across the board … which means it’s a huge opportunity.”
– Matt Golden, Golden Ventures

Pay transparency laws in US states like California and New York, rising worker demand for pay equity, coupled with the adoption of location-based compensation have made deciding what to pay employees a tougher question. As Golden noted, “There are so many complexities around the issue of compensation across the board … which means it’s a huge opportunity.”

“We see a white-hot market opportunity for Barley to help businesses get compensation right at a time when it is more important than ever,” said Golden.

Owainati, who still sees Excel and Google Sheets as the main “incumbents” in the compensation space, acknowledged that some other tech players have emerged that are trying to tackle this problem, including California-based compensation software firms Pave and Pequity. Compared to other available options, Owainati views Barley’s configurability, approach to benchmarking, and the breadth of its compensation solutions as setting the startup apart.

Barley plans to use this capital to fuel its product development and go-to-market plans.

Amid challenging economic conditions, Mainguy highlighted that the issues Barley aims to solve are “evergreen.” In light of the current market, the CPO noted that Barley aims to balance growth and building thoughtfully, as the startup looks to construct a sustainable, long-term business.

Feature image courtesy Barley.

The post Loopio co-founder launches Barley to help make employee compensation easier, more equitable first appeared on BetaKit.

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