Cocoon Raises $20M to Revolutionize Employee Leave

Simplifying Employee Leave with Cocoon

Navigating employee leave benefits can be challenging due to the complex interplay of company and governmental regulations. Cocoon aims to provide clarity and streamline the experience for both employers and employees.

Platform Launch and Funding

The platform became available across all 50 states on Wednesday, supporting various leave types including parental, medical, caregiver, and bereavement. It integrates company, governmental, and insurance benefits, managing compliance, claims, and payroll calculations comprehensively.

Alongside the launch, the San Francisco-based company announced a $20 million Series A funding round, spearheaded by Index Ventures, with contributions from First Round Capital, SemperVirens, XYZ, Magnify Ventures, and individual investors. This brings the total funding to $26 million, as stated by co-founder and CEO Mahima Chawla to TechCrunch. A prior $5.5 million seed round, also including Index and First Round, was secured in December 2020.

The Genesis of Cocoon

Founded in June 2020 by Mahima Chawla, Lauren Dai, and Amber Feng, the company’s origins lie in conversations with colleagues and friends regarding the difficulties surrounding leave benefits. Initially perceived as a simple "out-of-office" situation, they discovered the reality involved navigating intricate legal frameworks, understanding payment structures, and company-specific procedures.

“Companies, even those with generous benefits packages, often struggle with leave administration,” Chawla explained. “Our research, involving hundreds of employees and HR professionals, revealed a widespread sense of frustration. We believe taking time off for personal needs should be straightforward, and identified a significant opportunity to improve this process.”

How the Platform Works

Cocoon’s platform offers distinct interfaces for employers and employees. For employers, it automates compliance and payroll, relieving them of administrative burdens while ensuring accurate payroll responsibilities. Employees can design their leave from start to finish through an automated process, which Chawla claims takes less than 10 minutes.

Since its initial release in January, the platform has gathered valuable data on employee leave usage, providing employers with insights to optimize their benefits offerings.

A Holistic Approach to Leave Management

Cocoon is currently collaborating with major employers, such as Carta, and Chawla emphasizes their commitment to alleviating the complexities of leave. Unlike other companies addressing leave in a fragmented manner, Cocoon adopts a comprehensive strategy, leveraging software and automation to minimize communication and administrative overhead for both parties.

The newly acquired funding will be allocated to expanding the team, particularly in engineering, sales, and customer success, as well as developing additional product features.

“We are experiencing substantial interest from customer referrals and broker networks,” Chawla noted. “Our focus next year will be on broadening our employer base and extending our reach into diverse industries and organizations of varying sizes.”

Investor Perspective

As part of the investment, Mark Goldberg, a partner at Index Ventures, has joined Cocoon’s board of directors. He shared that this investment held personal significance, as he was completing paternal leave and had even contributed to his firm’s leave policy. He recounted a colleague spending over 25 hours resolving a clerical error with the California Employment Development Department during her maternity leave.

Goldberg has followed the Cocoon co-founders since their tenures at Square and Stripe. “When Mahima informed me the team was forming, I was eager to participate,” he stated. “We prioritize identifying exceptional founding teams. A strong core team in the initial stages often attracts top talent for subsequent growth, mirroring what we observed with Plaid.”