| SAN FRANCISCO
SAN FRANCISCO Feb 19 ZenPayroll, which provides
cloud-based payroll services to small- and medium-sized
businesses, said Wednesday it had secured $20 million in its
first round of venture funding from General Catalyst Partners
and Kleiner Perkins Caufield & Byers.
The deal, one of the larger Series A investments to close in
recent months in the Internet industry, comes about two years
after ZenPayroll raised a hefty $6.1 million in seed funding
from individuals such as Drew Houston and Aaron Levie, chief
executives of cloud-storage and file-sharing service provider
Dropbox and cloud-content storage and management service Box,
respectively. Series A investments may be provided in the form
of preferred stock.
Cloud-based Internet companies such as ZenPayroll will be
firmly in the spotlight in 2014, with anticipation swirling on
Wall Street around potential public market debuts for Dropbox
These companies represent a new wave of Internet firms that
have risen in recent years to move large swathes of business
computing - file storage, human resources, payroll - to the
cloud. Although less glitzy than the wave of social media that
came to age in recent years, their business models have more
predictable revenue streams.
ZenPayroll Chief Executive Joshua Reeves said his company
employs fewer than 30 people but is on track to process $400
million in annual payroll for businesses ranging from bakeries
to law firms.
Although large enterprises turn to established payroll
software like ADP, many small companies still use pen-and-paper
to keep track of payroll, Reeves said.
"Our belief that we could do it all in software," he said.
"Software is more accurate than humans."
With the paperwork for payroll varying in every state and
municipality, the company has expanded slowly to only seven
states, including California, New York and Texas.
Reeves said ZenPayroll would use its new capital to expand
its geographic reach and woo small business accountants.
Hemant Taneja, a partner at General Catalyst, will join the
ZenPayroll board as part of the deal.
Salesforce.com Inc, one of the first firms that
established the software-as-a-service business model, is an
existing investor in ZenPayroll, along with Facebook
business development chief Dan Rose, and David Sacks, founder of