ZenPayroll adds $60 million for software that actually makes life better for small businesses
Many companies looking to leverage new technologies to help small and medium-size businesses believe that more than anything, smaller organizations need cheaper and easier ways to build their online presences.
As such, there are more and more marketing, website development, and ad firms building products geared towards smaller businesses than ever before.
ZenPayroll, however, has taken a different approach. The company is making the employee payroll process - something that all organizations, large or small, must complete - much simpler. The company has found a way to improve a vital component of day-to-day operations for SMBs, which companies hocking website building and mobile marketing trickeration can’t offer.
And the SMBs have noticed. Since launching in 2012, the company says that its payroll software is being used by over 10,000 small businesses in 47 states, and will be operating in all 50 states by the end of the month. This morning, the company announced that it has raised $60 million in new funding to help continue to spur its fast growth.
The major appeal of ZenPayroll is twofold. First, the company automates the processes of payroll, taxes, and compliance. Second, with built-in features -- like one that allows companies to send personal notes to employees with their payroll stubs and another that lets employees donate to charity directly through the payroll software -- ZenPayroll has reimagined what has long been a mundane bi-weekly process.
As the company’s chief executive and co-founder Joshua Reeves explains, “We've reimagined compensation as a celebration of the relationship between employers and employees.”
Making the process easier is also a major factor in ZenPayroll's success. Reeves likens it to applying a similar ease-of-use like Gmail did with email. He said that advancements in cloud computing and the ubiquity of mobile devices make it possible for a company like his to exist today, where 10 years ago, that may not have been possible.
"We joke that you can run payroll from the beach," he said. "We've actually had customers that have sent us pictures running payroll from the beach. That's how much the world has changed."
With two major incumbents in the payroll space, ADP and Paychex, both of which were founded prior to 1972, bringing a fresh, innovative approach to payroll makes a lot of sense. There is also a tremendous opportunity. Of the 6 million small businesses in the U.S., 40 percent are still doing payroll by hand or on spreadsheets. And the major players in the space, Paychex and ADP, only serve 1 million of the 6 million small businesses in the country.
To seize the opportunity, ZenPayroll is looking to expand, rapidly. "Moving forward, we're looking to amplify everything that we are doing," said Reeves. The company is looking to hire at a rapid clip, expanding from a 60 person team based mostly in San Francisco to 300 employees by the end of the year, with an office in a yet-to-be-determined, more Eastern city.
The $60 million Series B round was led by new investor Google Capital, with Emergence Capital Partners, Ribbit Capital, and others taking part as well. Previous backers General Catalyst, Kleiner Perkins Caufield & Byers, and Google Ventures also joined the funding round, which brings ZenPayroll’s total funding to $86.1 million.
Laela Sturdy of Google Capital said that the firm’s interest stems from ZenPayroll changing the payroll process from an impersonal transaction into a meaningful connection between employers and employees. “We're delighted to join in their mission to free people to do their best work,” Sturdy added in a statement. "They're growing at an incredible rate and we're excited to see how they'll continue to help small businesses around the country."