Why I Invested in Joon
Investment information
Investment date: may 2021
Stage: Seed
What It Is
Joon is an HR tech company that allows SMBs (small and medium businesses) to offer seamless reimbursements for purchases at pre-approved vendors as an employee wellness benefit. An HR director sets the monthly allowance level for employees to spend on selected consumer brands, such as ClassPass and Peloton, and the system automatically reimburses the employee’s connected credit or debit card, thus eliminating the messy process of expense reimbursements.
Joon charges businesses about $5 per employee per month for the service, which equates to a small fraction of the expense business incur by handling this process manually. Long-term, the founders view the reimbursement service as a wedge to creating an employee wellness ecosystem, built for in-office and remote employees, alike.
Investment Thesis
Joon is strongly positioned to disrupt the $50 billion US employee wellness market, which is growing by a robust 6% per year and is expected to reach $66 billion in value by 2027. Joon’s seamless reimbursement solution perfectly supplements whatever PEO, ICHRA, or other employee benefits plan client companies employ to provide health and wellness services to their staff. As contention for top performing employees continues to rise, high-growth SMBs will increasingly adopt alternative employee wellness plans to entice these workers to join their ranks, supporting a robust opportunity for Joon.
Joon’s growth and traction have shown thus far to be quite strong, particularly for the company’s abbreviated time in operation. Though distribution is primarily powered by Joon’s modest sales staff, the company is increasingly gaining new clients through referrals from existing platform companies, reducing the company’s need to invest in marketing or the sharp expansion of its sales staff. With new clients and vendors joining at expanding rapid rates, the company is increasingly able to leverage both sides of its marketplace to quickly onboard additional participants on both ends, creating a value add for employees.
Although the employee wellness space is seeing a dramatic rise in companies aiming to automate and simplify the benefit process, Joon is uniquely positioned to achieve success in this area of continued opportunity. By partnering with major health insurance carriers, rather than work against them, the company is able to offer insurance-subsidized pricing to employees for many of its participating vendors. Joon also uses its carrier relationships to secure new clients from the insurers’ clientele, dramatically reducing its CAC and supporting its robust LTV:CAC ratio. This exclusive position acts as a particularly impenetrable moat for the company, as these major legacy carriers are slow to adopt partners, and only did so with Joon after the company demonstrated its value through a successful pilot program.
Long-term, Joon’s founders envision the company transforming into a holistic employee wellness ecosystem that incorporates traditional and emerging forms of corporate benefits into a modular wellness experience that boosts productivity, health, and quality of life. As Joon continues to grow its clientele, the company will gain increasing leverage with participating brands and vendors, allowing the company to negotiate a back-end commission on each purchase made by a participating user. With dozens of companies onboarded in its first full year of operation, despite the challenges posed by the shift to a work-from-home model, Joon is already on track to scale and expand its reach to new geographies.
WYNTBs (“What You Need to Believes”)
SMBs have a persistent, growing need to offer holistic employee benefits in order to attract top talent
Joon’s insurance-based moat is legitimate, and will continue to grow in strength as the company scales, supporting its ability to retain clients
Joon will maintain its strong client retention and prevent CAC expansion as it grows through a combination of improving its sales process and an increasing number of in-bound clients
At scale, Joon will be able to secure commissions from participating vendors on each transaction, as its leverage with brands increases
An economic and growth flywheel opportunity exists, wherein acquisition of clients, vendors, and partnered insurance carriers, leads to increasingly quick growth cycles
The investment has an attractive return profile
Outlook
Long-term, Joon possesses the resources, capabilities, and model to become a very large player in the employee benefits space. The company’s increasing focus on high growth companies with distributed workforces is perfectly aligned with macro industry trends. The company’s model, which is self-perpetuating and supportive of a growth flywheel, will enable Joon to quickly scale with ever-improving unit economics.
As Joon grows and their clients’ employees become increasingly important customers to Joon’s partnered brands, the company will be able to leverage its position to command kickbacks on every transaction, further monetizing the ecosystem. With competition for talent only increasing, companies will become more, not less, reliant on Joon’s ability to simplify their benefits operation and support their recruitment efforts.