Sorbet is an Israeli startup that’s trying to tackle a major challenge facing U.S. employees. The company’s CEO and co-founder - Veetahl Eilat-Raichel - explains in a chat with Geektime that employees in the U.S. use only 72% of their vacation days every year. “This creates a real problem on the HR side, with more employees grinding the work week, dropping in productivity, etc. However, more importantly, this problem hurts a company’s finances. Nearly 70% of companies in the U.S. rollover accrued days off, which creates an almost $270 billion commitment added to their books - an average of $2,600 per employee,” says Eilat-Raichel.
Real money held in accounting jail
Eilat-Raichel explains that by not using our accrued vacation days, we in fact work more days - which means that the companies we work for owe us more money. And because that debt continues to balloon until the day we leave the company, it’s deemed a financial asset - unliquidated - which is held hostage on our employers books, meaning nobody gains from it.
This is where Sorbet enters the frame. The Israeli startup “buys” the commitment to pay vacation days from the employer, and liquidates it for a price. Now the employer technically owes the vacation days to Sorbet, and can decide when to realize them - thus relieving the accounting nightmare.
Eilat-Raichel explains that on a technical level, Sorbet’s platform interfaces with traditional organizational systems, such as payroll, accounting, HR, and with an employee’s private account. This helps to better understand their preference, learn their vacation patterns, and adapt to company policy and needs.
From all of this data, Sorbet’s system provides companies with complete analysis of those unused vacation days, “locked” in accounting jail. The analysis breaks down the financial impact of those “locked up” vacation days and recommends a specific amount of days to be liquidated per employee.
The Sorbet system includes an app for employees as well, where at any given moment the app can recommend employees what to do with their unused days and when to do it. When an employee decides to use a vacation day, the remaining balance is charged on a Visa debit card which can be used as cash, anywhere.
According to Eilat-Raichel, currently the company has no direct competitors - rather only companies that offer leads. One of those companies enables employees to donate their vacation day balance to a charity of their choice, and another one helps employees pay off their student loans by liquidating their accrued time off.
The company’s product started out as a platform for employee loans. However, come COVID outbreak, Sorbet’s founders kept hearing about more and more companies worried about the amount of vacation days their employees were accruing. “Since the outbreak of the pandemic, employees have just stopped taking vacation days all together,” tells Eilat-Raichel. This was one of the main reasons that the company decided to pivot - and it looks to have paid off.
The company closed $6 million in Seed funding from Viola Ventures. The round also saw participation from Global Founders Capital and Meron Capital. Founded in 2019, the company currently employs a team of 25 - with 11 of them based at Sorbet’s Tel Aviv R&D center. Eilat-Raichel confirms that the company’s system is currently in pilot at 5 different companies, which will change this coming June when pilot customers turn into paying customers.