Gusto Raises $200 Million with $3.8 Billion Valuation

Payroll, benefits, and HR platform Gusto just landed $200 million in funding, a slew of new investors, and a valuation of $3.8 billion. The Series D round almost doubles the $2 billion valuation the San Francisco-based company received in December of last year after closing $140 million in funding. Gusto’s total funding now sits at $510 million.

The new investors, Fidelity and Generation Investment Management, were joined by existing investors T. Rowe Price Associates, Dragoneer, General Catalyst, CapitalG, 137 Ventures, Y Combinator Continuity, and Emergence Capital. Gusto CEO Joshua Reeves said that Gusto selected the group “based on their long-term perspective.” He added, “These investors are committed to our view of creating a durable and sustainable business, and their investments will fuel our ongoing creation of equitable solutions and inclusive economic growth for everyone.”

Gusto will use the funding to further its research and development efforts, specifically in the fintech and healthcare arenas. The company also plans to grow its workforce, which currently sits at more than 1,000 employees spread across Denver, San Francisco, and New York.

Along with the funding, Gusto has onboarded its first independent board member, Anne Raimondi (pictured), former SVP of operations at Zendesk.

Gusto has added two notable features to its platform recently, including Time Tracking, which syncs hourly employees’ time directly to the company’s payroll in order to properly calculate time off and holidays; and Flexible Pay, which allows employees to select when they prefer to receive their paycheck. This year, the company formed partnerships with ScaleFactor and Trainual to deliver accounting and offer new hire training, respectively.

As for what’s next, it’s hard not to wonder about an IPO. We interviewed Reeves for a blog post titled M&A is the New IPO last month. When asked about the company’s plans, Reeves said, “There are pros and cons to being a public company, and we believe that today, the benefits of Gusto staying private outweigh the benefits of being public.” He added, “An IPO isn’t our end-goal; instead, it’s creating a world where work empowers a better life. We currently serve more than 1% of all employers in the U.S., which is an accomplishment we’re incredibly proud of, but we realize we still have a lot more work to do. Building Gusto to its full potential is a multi-decade mission for me.”

Gusto launched in 2012 under the name ZenPayroll. At FinovateSpring 2014, Reeves showcased the company’s flagship payroll solution while smiling throughout the entire seven minute demo.

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Gusto Teams with Trainual to Automate Job Role Training

Payroll, benefits, and HR platform Gusto is improving its offerings by teaming up with Trainual, a cloud-based training manual software company.

The collaboration will help Gusto’s business clients automate the process of onboarding new employees by giving them resources to train them in their new role. Igor Khayet, head of business development at Gusto, referred to training and onboarding as “pain points for small businesses.” He added, “[O]ur partnership with Trainual provides an easy and efficient way to serve a business’ team so they can do their best work.”

When a Gusto client adds a new employee, the new hire will automatically be added to Trainual and receive the training they need for their job. The integration with Trainual will allow Gusto’s small business clients to document processes and policies,
customize operations manuals, assign training and test sessions, and monitor completion rates.

“We’re particularly excited about this partnership because it streamlines one of the most commonly missed, but critical steps when a new hire is brought into an organization: equipping them with the right training from the start,” said Trainual founder and CEO Chris Ronzio. “Business owners can now easily connect critical aspects of their business, bringing a new level of operational efficiency to the onboarding process so they can continue to focus on what matters most –– growth.”

With offices in San Francisco and Denver, Gusto processes tens of billions of dollars in payroll for more than 60,000 businesses in the U.S. The company also offers an easier way for small businesses to offer their employees benefits such as health insurance, 401(k) retirement plans, and 529 college savings plans.

Gusto launched in 2012 under the name ZenPayroll and showcased its flagship payroll solution at FinovateSpring 2014. Last year, the company unveiled Flexible Pay, a solution that allows employees to get paid on a different schedule than their employer’s payroll schedule. The company has raised $316 million. Joshua Reeves is CEO.

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