Payroll startup Gusto raises $140 million Series C to expand its platform and transform the future of work
Gusto, the leading payroll, benefits and HR technology platform for small businesses, has raised $140 million in a Series C funding round to drive significant additions to Gusto’s all-in-one payroll, benefits and HR technology platform including new capabilities to help employees manage when and how they get paid. The funding is led by late-stage investors by T. Rowe Price Associates, Inc., MSD Capital (Michael Dell), Dragoneer Investment Group with participation from Y Combinator Continuity Fund. Existing investors: General Catalyst, CapitalG, Kleiner Perkins, 137 Ventures, Emergence Capital, also joined the round.
Founded in 2011 as ZenPayRoll by Edward Kim, Joshua Reeves, and Tomer London, before it later changed its name to Gusto. The San Francisco, California-based startup provides a cloud-based payroll, benefits, and human resource management solution for businesses. The startup operates an online platform that provides payroll, benefits, human resource, and integration services for employers and employees in the United States. Gusto also offers health benefits and workers’ compensation benefits that include medical insurance, commuter benefits, and 401(k) contributions as well as workers’ compensation insurance plans, time tracking and integration services, and access to employees for processing payroll from web-enabled devices such as smartphones and tablets.
“We are thrilled to welcome these long-term investors to the Gusto community. They share our passion for creating a world where work empowers a better life,” said Josh Reeves, Gusto co-founder and CEO. “We chose these investors because they care about enabling small businesses with modern payroll, benefits and HR. There are millions of companies out there to help, and this is a long-term journey for us. We’re just getting started.”
“We believe Gusto has an opportunity beyond the payroll category in which they have demonstrated leadership for the last six years,” said Henry Ellenbogen, T. Rowe Price New Horizons Fund portfolio manager. “The company has a strong and focused management team, and it has the potential to become much larger as it expands its efforts to employees who seek to improve their financial mobility and achieve greater personal prosperity.”
The investment will be used to drive significant additions to Gusto’s all-in-one payroll, benefits and HR technology platform including new capabilities to help employees manage when and how they get paid. The company recently launched Flexible Pay, which lets employees choose when they want to get paid, regardless of their employer’s pay schedule and without affecting their employer’s payroll or cash flow.
“We are thrilled to deepen our support for Josh and the team. They have created an incredible opportunity with small businesses, which are responsible for two-thirds of the net new jobs and half of the U.S.’s GDP,” said Ken Chenault, General Catalyst chairman and managing director. “Gusto is supporting entrepreneurs and family-run companies that have been left behind by others while becoming the growing standard for small businesses.”
Gusto processes tens of billions of dollars of payroll and empowers employers to provide robust benefits like health insurance, 401(k) retirement plans and 529 college savings plans, that traditionally only larger companies could offer their employees. The company serves more than one percent of all employers in the U.S. It also provides access to employees and contractors to browse their previous pay stubs, review their payroll forms, verify their personal details, and statistics about their pay, tax payments and federal forms filing services, and security and support services. Gusto serves startups, coffee shops, doctors, creative agencies, lawyers, and boutiques.