Sorbet Secures $6 Million Seed Funding to Address Paid Time Off Liabilities

Sorbet, a U.S./Israeli startup focused on managing the financial implications of paid time off (PTO), has successfully completed a $6 million seed funding round. The investment was spearheaded by Viola Ventures, with additional participation from Global Founders Capital and Meron Capital.

The Hidden Economics of PTO

The financial aspects of employee PTO are often overlooked by businesses. Sorbet alleviates the burden of PTO liabilities from employers, enabling employees to utilize their accrued time off. This approach provides companies with enhanced control and improved forecasting capabilities regarding the financial impact of PTO.

Significant Unused PTO Represents a Major Financial Issue

According to Sorbet, U.S. employees utilize only 72% of their available PTO, resulting in approximately 768 million unused days annually. This represents a substantial financial value of around $224 billion.

This situation poses challenges for Chief Financial Officers (CFOs) and accounting teams, as unused PTO creates balance sheet liabilities. Employers may be obligated to compensate employees for unused PTO, leading to potential cash flow issues. Sorbet addresses this by acquiring these PTO liabilities from employees and distributing the equivalent cash value via prepaid credit cards.

Addressing a Market Inefficiency

CEO and co-founder Veetahl Eilat-Raichel explained that their research revealed a significant market failure concerning the structure of PTO. She described it as a seemingly mundane payroll item that translates into a substantial $224 billion problem for U.S. businesses.

“Employers are essentially borrowing funds from their employees under unfavorable conditions, while employees also fail to fully benefit,” Eilat-Raichel stated. “This creates a detrimental situation for all parties involved.”

Sorbet's Value Proposition for Employers

By assuming PTO liabilities, Sorbet empowers companies to manage their cash flow effectively and determine repayment schedules. The company offers attractive funding terms, resulting in cost savings and complete control over financial resources.

Furthermore, Sorbet enables employers to provide valuable financial benefits to employees, particularly during times of economic uncertainty.

Proactive PTO Management Through Technology

Sorbet’s platform integrates with existing calendars, HR, and payroll systems. It analyzes employee habits and proactively suggests personalized, pre-approved breaks, including:

• Micro Breaks (3-6 hours)
• Micro Vacations (1-4 days)
• Vacations (+1 week)

The startup claims this proactive approach can increase PTO utilization by as much as 15%.

Flexible Financial Arrangements

Employers have the flexibility to renegotiate loan terms with Sorbet, aligning them with future cash flow projections. This also protects against the impact of salary increases and provides access to additional financial advantages.

The Sorbet Team

The company’s co-founders include Veetahl Eilat-Raichel, previously of L’Oréal, Lockheed Martin, and a fintech venture; Eliaz Shapira, co-founder and CPO; and Rami Kasterstein, co-founder and board member.