This brings Gusto’s total amount raised to $310 million and boosts its valuation to almost $2 billion. Joining existing investors in the round are MSD Capital (Michael Dell), portfolios managed by T. Rowe Price Associates, Dragoneer Investment Group, and Y Combinator Continuity Fund.
Josh Reeves, Gusto CEO and co-founder, said that the new investors share the company’s passion for “creating a world where work empowers a better life.” He added, “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.”
Gusto will use the investment to enhance its payroll, benefits, and HR technology to add more direct-to-employee benefits that allow employees to manage how and when they get paid. The company recently unveiled a development along these lines with the launch of Flexible Pay, a solution that allows workers to choose a payday that works best for their cashflow situation, outside of their employer’s standard payroll schedule.
Henry Ellenbogen, T. Rowe Price New Horizons Fund portfolio manager, noted that Gusto’s expertise isn’t just limited to payroll. “We believe Gusto has an opportunity beyond the payroll category in which they have demonstrated leadership for the last six years,” He said. “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.”
Gusto, which launched in 2012 under the name ZenPayroll and showcased its flagship payroll solution at FinovateSpring 2014, has been busy lately. Not only has the company expanded its client base to serve more than one percent of all employers in the U.S., the company also paired up with Xero earlier this month and in June launched a directory of accounting firms suitable for small and medium-sized businesses.