Lattice Raises $175M at $3B Valuation - People Management Platform

Lattice Secures $175 Million in Series F Funding

Lattice, a leading platform for workforce management – encompassing performance evaluations, employee recognition, goal tracking, and career planning – has experienced substantial growth in recent years. This surge in prominence coincides with the evolving nature of work, particularly as prompted by the challenges presented by the global health crisis. The company has now successfully closed a significant funding round, securing $175 million in a Series F round that establishes a valuation of $3 billion.

Funding Details and Growth

The investment round was spearheaded by Thrive Capital, Elad Gil, Tiger Global, and Dragoneer. Existing investors, including Founders Fund, HighSage Ventures, Shasta Ventures, Fuel Capital, and Khosla Ventures, also participated, alongside several new, undisclosed angel investors. This latest funding brings Lattice’s total raised capital to $330 million, arriving just ten months after its previous Series E round, which valued the company at $1 billion.

Jack Altman, founder and CEO of Lattice, revealed that the company was proactively approached by investors due to its demonstrated strong growth trajectory.

Focus on Knowledge Workers and Customer Base

Currently, Lattice primarily serves desk-based professionals, often referred to as “information” or “knowledge” workers. The platform now boasts a customer base of 3,550 businesses, representing an increase of over 1,000 since March 2021.

A significant portion of Lattice’s clientele consists of technology companies located near its headquarters. These businesses comprise approximately half of its user base, including prominent names like Slack, Turo, and Clio. While the platform doesn’t currently cater to deskless or front-line employees – who necessitate different tools and priorities – Altman indicated a potential interest in expanding into this segment in the future.

Adapting to the Modern Workplace

Lattice’s success is largely attributed to its alignment with the current work landscape.

The work environment has undergone a dramatic transformation over the past two years. The widespread adoption of remote work and smaller, localized work settings, driven by COVID-19, hasn’t diminished the need for cohesive teamwork. Effective communication regarding achievements and aspirations, coupled with managerial insights for recognition and improvement, remains crucial.

Prior to the pandemic, Lattice was already experiencing consistent growth. However, the pandemic underscored the critical importance of effective people management, particularly when supported by tools that employees readily embrace.

The Impact of the Pandemic

“We had already developed numerous products and achieved considerable traction before the pandemic,” Altman explained. “However, the current environment has accelerated progress for several reasons. The traditional office fostered interpersonal connections and mentorship. While software for people management was helpful even in an office setting, its necessity became paramount when those organic connections were disrupted. Employees needed to feel connected to a larger purpose, even while working in isolation.”

“Systems like Lattice provide a structured approach to connection and interaction, ensuring employees feel valued by their managers, both professionally and personally. COVID-19 created a significant tailwind for our platform.”

Economic Factors and Employee Investment

Surprisingly, the economic climate also played a role in Lattice’s success. Initial fears of a widespread economic downturn in 2020 did not fully materialize. While some sectors, like travel and tourism, faced significant challenges, the overall economy stabilized, and unemployment rates remained manageable. This led to increased employee bargaining power and a greater emphasis on investing in people management tools.

Altman summarized this shift in thinking as: “Companies realized they needed to invest more in their people to retain them. This became the prevailing economic driver.”

Positioning in the HR Tech Landscape

The field of enterprise IT for people management has evolved considerably in recent years. Established HR software providers like Workday have expanded their toolsets to encompass performance and compensation management. Simultaneously, specialized companies like 15Five have emerged, focusing on areas such as goal setting and employee praise. Lattice both collaborates with larger platforms and competes with them.

It is anticipated that competition will become increasingly prominent as Lattice continues to enhance its platform’s functionality. Over the past few years, the company has added performance management, engagement surveys, and a range of career development tools.

Future Plans and Employee-Centric Approach

“Our long-term strategy is to continue building and expanding our offerings,” Altman stated. While the company may explore more traditional HR tools, and potentially incorporate AI-based automation, he emphasized that Lattice will always prioritize the individual employee experience, rather than solely focusing on the needs of the HR team.

“The world of work is shifting from a company-centric to an employee-centric model,” he explained. “We are built on this core principle.”

Investor Confidence

The platform’s expansion and its growing, loyal customer base present significant opportunities for investors.

“We’ve observed several converging trends – the rise of remote work, the evolving role of HR – that have fueled growth in the HR market,” said investor Elad Gil. “Lattice’s approach of offering a comprehensive suite of interconnected tools has resonated with the market and driven impressive growth.”