Venture Capital News: Gusto Announces $50M Financing Round
SAN FRANCISCO, CA, Gusto (f.k.a. ZenPayroll), an online platform for payroll, compliance and benefits services, has secured over $22 million of a $50 million Series B extension, according to a regulatory filing.
Gusto, the company formerly known as ZenPayroll, has raised $50 million more in venture-capital funding, according to an SEC filing unearthed by VentureBeat.
The new round of funding gives the company a $1 billion valuation, according to Buzzfeed.
CEO Josh Reeves described the round of funding as an 'opportunistic insider round' to VentureBeat, and said that it's not an entirely new round -- just part of Gusto's Series B round from earlier this year.
'Last month, we knew that there was a lot of interest from existing investors to put in more capital,' he told VentureBeat. 'We decided to take in more capital because we wanted to give investors a chance to increase their position. They've been incredibly supportive and helpful.'
In September, ZenPayroll rebranded itself as Gusto as it expanded to help business owners with more than just payroll services. CEO Josh Reeves told Business Insider then that the name change 'is something we've been aware of and knew we were going to do since month three of the company.'
The San Francisco-based company offers a cloud-based system to automate tax calculations and payroll payments. Its web-based services are used by more than 20,000 small businesses.
In September, the company announced that it would provide health benefits and workers' compensation to these businesses as well, so employers and employees can use Gusto's system as a one-stop shop for all their compensation-based needs.
With the announcement, it seemed that Gusto and Zenefits, a $4.5 billion company that lets employers manage their benefits, were squaring up to become rivals, though the two companies have worked closely in the past. Zenefits is working on a system to process payroll, according to a BuzzFeed report earlier this year, and Gusto is breaking into handling benefits.
Gusto, valued at $560 million after the company announced a $60 million Series B round of funding led by Google Capital earlier this year, says it processes billions of dollars in payroll annually and works with businesses in every US state.
It's unclear if the new round of funding Gusto is seeking will push its valuation up past $1 billion, allowing it to join an ever-expanding list of more than 140 companies with such valuations. Reeves did tell VentureBeat that the new round valued the company 'significantly higher,' but did not disclose a firm number.
Gusto is popular with top Silicon Valley CEOs, too. A list of angel investors in the company, disclosed in November, reads like a who's who of Silicon Valley.
CEOs of companies, including Stripe, Evernote, Eventbrite, Instagram, and WordPress, all invested in the company's $20 million Series A round. Ashton Kutcher, Jared Leto, and founders of tech companies, including PayPal, Nest, Mint, Twitter, and Reddit, also participated.
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