Sorbet Raises $21M To Help Employees Turn Paid Time Off Into Cash

Sorbet, a fintech startup that developed a platform to help employees turn unused paid time off (PTO) into cash, announced that it raised $21 million in seed funding, said to be the largest ever seed round ever for a fintech startup in Israel.

Sorbet initially closed a $6 million seed round in April. Last week, the company has announced a $15 million extension, led by Dovi Frances’ Group 11 with the participation of current investors including Viola Ventures, Meron Capital, and Global Founders Capital.

Unused PTO is a major market inefficiency, affecting both employers and employees, Sorbet says. Even before the pandemic, 28 percent of PTO went unused, totaling $270 billion in the US alone every year. Employees often can’t cash out their PTO until they are let go or resign; for employers, unused PTO becomes a cash flow liability on the balance sheet, the company said in a statement.

Founded in 2019 by CEO Veetahl Eilat-Raichel, CPO Eliaz Shapira, and Rami Kasterstein, Sorbet offers a solution meant to account for the wishes of both parties. Its platform integrates into a company’s calendar, human resources, and payroll networks. It then tracks each employee’s usual work habits and creates personalized recommendations for when to take time off, including “micro breaks” (three to six hours), “micro vacations” (one to four days), and vacations (a week or more).

While the company said this increases time off usage by more than 15 percent on average, giving employees a chance to recharge, it also helps Sorbet predict how much time off will remain unused. Sorbet then buys out this unused PTO from the client and refinances it, removing the employers’ liability and helping them save on financing costs. Employees receive virtual prepaid cards that they can use anywhere, along with access to brand partnership perks like upgrading to business class or taking an online class.

Dovi Frances, founding partner of Group 11, highlighted Sorbet’s opportunity in this space. “The Sorbet team identified a massive market inefficiency hiding in plain sight,” Frances said. “With a $270B market opportunity, it was crystal clear to me that this was the time to push forward and not look back.”

“It is apparent that we’re in the midst of a tectonic shift in employer-employee dynamics,” said Eilat-Raichel. “With inbound global interest exceeding our wildest expectations, I had the incredible privilege of selecting the best investors to help us expand and accelerate.”