Feb 19th 2014, 14:00, by Leena Rao
ZenPayroll, the startup that offers an easy to use, cloud-based payroll application; is announcing a new round of Series A funding totaling $20 million. The round was led by General Catalyst Partners with Kleiner Perkins Caufield & Byers also participating. The startup previously raised $6.1 million in funding from a list of all-star investors, including Salesforce, Box CEO and founder Aaron Levie, Data Collective, Dropbox CEO and co-founder Drew Houston, Google Ventures and many others.
We hear that the valuation in the round was just above $100 million, post-money.
ZenPayroll is disrupting a space that incumbents like ADP and Paychex have dominated for some time. The startup offers a much simpler, cloud-based SaaS to automate all payroll tax calculations and payments, as well as provide direct deposit to employees. And the application allows for filing of all payroll-related government documents paperlessly. In fact, it takes around 10 minutes to sign up on ZenPayroll and gain access to the dashboard.
Specifically, ZenPayroll focuses on providing a simpler payroll experience for small businesses who do not have a corporate office and manually do their own payroll. Reeves explains in the video above that millions of small businesses do their own payroll, with half managing it on paper and spreadsheets.
“We are entirely re-thinking a product category, and our goal is how do we make payroll more about the people,” Reeves explains. “Compensation was previously a very impersonal, transactional event.”
Part of that is adding features like the ability for employees to give a portion of their paycheck each month or a fixed amount to charity of their choice. Other features include “autopilot” payroll and spot bonuses, as well as other employee-facing enhancements like self-onboarding, and visually informative pay stubs. Last year the company debuted an API, to allow third-party applications to send data, including hours worked, tips, bonuses, commissions, reimbursements, directly to the payroll app automatically without having to manually import the information.
Design and usability is also an important part of ZenPayroll’s allure, as you can see in this Design Sprint with investor Google Ventures.
As of last Summer ZenPayroll was processing $150 million in annual payroll, a number that has increased to $400 million. The company’s clientele includes small businesses such as bakeries, law firms, flower shops, hotels, dentist offices, restaurants, and more. Word of mouth has been a primary driver of growth; with most of the businesses with 100 employees or less.
Reeves explains that ZenPayroll still has $4 million left of its seed funding, but wanted to help accelerate growth and expansion of the product. Part of that plan involves adding more engineers and product developers, he adds. And he felt that the time was right to add an institutional investors to the team. As part of the Series A financing, Taneja from General Catalyst will be joining the ZenPayroll Board of Directors, and Komisar will also take an active role in advising the company.
“There’s a major shift taking place with small businesses embracing software to help them compete effectively in the 21st century,” said Taneja in a release. “ZenPayroll’s growth is a rocket ship and it’s extremely rare to find a company as mission-driven as they are.”
“Small businesses in particular have struggled with doing payroll manually or using overly complex, expensive software,” said Komisar. “ZenPayroll is transforming compensation from the unloved, bureaucratic process it is today, to an opportunity to improve the employer and employee relationship.”
Reeves says that the company currently has 20 employees and he expects to double that in the coming year.
Part of Reeve’s ambitions focus on empowering small businesses withe easy to use technology that was previously only available for the enterprise. But it’s clear that even beyond the small business market, payroll is a major pain and a market that’s ripe for disruption. While small businesses may be beneficiary of ZenPayroll’s mission, there is a large opportunity to make an easy, and secure payroll app that large enterprises and small business can use. Clearly Dropbox and Box have done this for file sharing, and Zendesk has captured this for customer service. Next up: payroll.