One of many greatest ache factors for any enterprise, however particularly SMEs, is managing payroll.
A startup that has constructed payroll automation software program to make the method much less painful, Pento, has raised $35 million in a Sequence B spherical of funding co-led by Tiger World Administration and Avid Ventures.
The funding marks Tiger World’s first time investing in London-based Pento. Avid has invested beforehand, together with different current backers Normal Catalyst, Seedcamp and LocalGlobe. It additionally comes simply six months after the startup raised a $15.6 million Sequence A led by Normal Catalyst. The corporate declined to disclose at what valuation both spherical was raised, saying solely that its present valuation is “a significant step up” from its Sequence A.
Based by Jonas Bøgh Larsen and Emil Hagbarth Rasmussen in 2017, Pento has now raised $53.4 million since its inception. The startup’s mission is to assist release firms from “onerous outsourcing and outdated software program.” Pento says its SaaS providing totally automates the payroll course of in order that payroll managers and finance groups don’t need to depend on spreadsheets, PDFs, e-mails and guide checks. It claims to cut back the period of time its prospects spend on payroll by as much as 80% by giving them “extra management and visibility” over their month-to-month pay run. It does this by automating every part from tax calculations to funds to reporting necessities so that companies of any dimension “can run their payroll in minutes as an alternative of days.”
It should be doing one thing proper. CEO and co-founder Bøgh Larsen mentioned that over the previous yr, Pento has seen its income climb “10x.” Whereas we don’t know from what base, the corporate did say it has seen “consecutive record-breaking months of progress” since its Sequence A. It’s additionally added a number of “main” new prospects, together with Britain’s Starling Financial institution, in addition to integrations with companions similar to Personio, Hibob and BambooHR. Different prospects embody tech startups Pleo and Cuvva in addition to Trustworthy Burgers and Magnificence Pie. On the whole, Pento works with lots of of SMEs and mid-sized companies with 30 to 500 staff, and is more and more serving bigger enterprises with round 2,000 staff.
With its SaaS mannequin, the corporate makes cash by charging prospects a set month-to-month payment.
Whereas it plans to increase internationally sooner or later, Pento for now could be targeted on its dwelling market of the U.Okay. and Europe, the place it says that payroll outsourcing is a virtually $6 billion market that’s anticipated to develop at an annual charge of 4.4%. Within the U.Okay. alone, there are an estimated 20,000 small and medium-sized companies and 4,000 mid-market companies which are potential prospects, it says.
“This represents a chance to rework payroll automation for almost 10 million staff throughout the U.Okay. alone and a $1+ billion annual income alternative,” Bøgh Larsen mentioned.
Pento plans to make use of its new capital partly to increase into new European nations and towards product growth, service growth and associate integrations. It additionally, naturally, plans to do some hiring. It’s already grown its workforce to 70 staff, up from 20 a yr in the past.
Along with its SaaS providing, Pento offers infrastructure by means of its partnerships and integrations with current accounting software program, HR merchandise and pension suppliers. It has additionally developed an open payroll API that’s at the moment in beta, with the intention of permitting any enterprise to construct customized integrations to automate extra of their workflows, similar to time-tracking or shift planning. That API may even permit staff to share pay and compensation information with third-party apps and providers to validate their earnings to credit score companies, in addition to different monetary and HR organizations, the corporate mentioned.
“We constructed Pento having seen firsthand simply how damaged the present payroll processes are, and our continued success showcases simply how strongly forward-thinking firms are asking for instruments to repair this,” mentioned Bøgh Larsen.
Opponents embody France’s PayFit, ADP and legacy services-heavy payroll outsourcing companies. Pento says that its important differentiator is that it’s constructing a payroll-only product with an integrations-first method, which means that — versus a lot of its competitors — Pento companions and integrates with different instruments/merchandise (similar to HR, bills administration and accounting) that prospects use as an alternative of constructing their very own.
That distinction was an enormous draw for Addie Lerner, founder and managing associate at Avid Ventures, who mentioned her agency has turn out to be more and more excited concerning the “n of 1” market alternative for Pento to be a pure-play payroll automation chief in Europe, and past.
“We proceed to listen to constructive suggestions from the market on Pento’s technique of specializing in payroll solely somewhat than payroll plus HR,” she wrote through e-mail.
Long term, if Pento can turn out to be the infrastructure layer for HR and compensation through its soon-to-be-rolled-out open API, Lerner added, the corporate would turn out to be additional embedded into its prospects’ payroll and HR workflows.
“It might then leverage its strategic positioning of managing payroll for its prospects and being within the vital move of payroll funds to monetize a set of ‘Pento for Worker’ merchandise together with monetary choices similar to lending, KYC, and extra,” she mentioned.