HR & Payroll solution startup Gusto has raised $140 million in a Series C funding round. The new investment values the company at about $2 billion, twice its valuation from three years ago.
The funding round was led by T. Rowe Price Associates Inc., Y Combinator Continuity Fund and General Catalyst. MSD Capital (Michael Dell), Dragoneer Investment Group together with existing investors CapitalG, Kleiner Perkins, 137 Ventures and Emergence Capital participated in the round.
The company, founded in 2011, offers payroll and benefit services to small- and medium-sized businesses in the U.S. The last time it raised money was in 2015, when it brought its total funding to $176 million. Gusto currently targets businesses with fewer than 200 employees, offering payroll services as well as additional features like health insurance and 401(k) retirement plans. The company currently counts more than 60,000 companies as customers, and believes it has room to grow among the more than 30 million small businesses in the U.S., which employ about 48 percent of American workers, according to the U.S. Small Business Administration.
“We are thrilled to welcome these long-term investors to the Gusto community. They share our passion for creating a world where work empowers a better life,” said Josh Reeves, Gusto co-founder and CEO. “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.”
“We believe Gusto has an opportunity beyond the payroll category in which they have demonstrated leadership for the last six years,” said Henry Ellenbogen, T. Rowe Price New Horizons Fund portfolio manager. “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.”
The investment will be used to drive significant additions to Gusto’s all-in-one payroll, benefits and HR technology platform including new capabilities to help employees manage when and how they get paid.