- API-first payroll infrastructure provider Zeal (formerly Puzzl) announced it raised $13 million in Series A funding. These are the details.
API-first payroll infrastructure provider Zeal (formerly Puzzl) announced it raised $13 million in Series A funding led by Spark Capital with participation from Commerce Ventures and notable individual investors. including Marqeta CEO and Founder Jason Gardner and CRO Omri Dahan, Robinhood Founder Vlad Tenev, UltimateSoftware EVP Mitch Dauerman, and SVP Bob Manne, and Namely Founder Matt Straz.
This funding round follows a $1.6 million seed investment led by Long Journey Ventures, Box Group, and Scott Banister and Cyan Banister. And Zeal also announced it has added Spark Capital’s partner Natalie Sandman to its Board of Directors.
Zeal is a leader in the embedded fintech ecosystem and empowers platforms to build highly individualized payroll products. And unlike traditional payroll companies like ADP or Paycor who provide direct payroll processing to an individual Employer, Zeal helps platforms and large enterprises to build their own payroll products.
The software platforms that sell B2B services use Zeal to build their own payroll product to sell to their customers. And enterprises that pay a large volume of workers use Zeal to build a custom payroll product that can automate high volumes of payment processing and keep payment data on their own native system. Zeal is now live in all 50 states and American territories and helps platforms process payroll for W2 employees and payments for 1099 contractors.
Zeal’s goal is to touch every American paycheck with its tax and payment technology, and to ensure that American employees are paid correctly and efficiently. And over $8.8 trillion worth of payroll is processed annually and America’s 11,000 tax jurisdictions produce over 25,000 income tax code changes a year.
In this regulatory climate, the IRS indicates that over 40% of small- to-medium size businesses pay at least one payroll penalty per year. And in 2019 alone, the IRS levied almost 5 million penalties related to payroll taxes, totaling $13.7 billion. Zeal is handling this issue by being the single source of truth for payroll tax and serving as an intermediary between government agencies that pass laws and private companies that serve as direct payroll providers.
“There are so many services that want to embark on their journey to becoming a fintech company. Payroll is a sticky product that provides platforms with a wedge to help them launch their next 5-10 financial offerings including business and health insurance, lending, cards and wallets etc. In the past, it was really difficult for platforms to build payroll, because of the risks and maintenance associated with taxes and payments, and that’s exactly where Zeal steps in.”
— Kirti Shenoy, Zeal CEO and Co-Founder
“Zeal is poised to lead a new category of embedded fintech. Helping build the payroll product at Zenefits, I know first-hand the intricacies of constructing a custom platform. The one-size-fits-all payroll product is outdated and Zeal makes it simple for any business to create the payroll product that fits their unique needs.”
— Spark Capital partner Natalie Sandman
“At our peak we had thousands of 1099 contractors on our platform and were processing high volumes of payments ourselves. Our scale caused government departments to push for us to reclassify our workers as W2 employees and process payroll. There was no product on the market that allowed us to seamlessly and programmatically run W2 payroll at scale and that’s how we were introduced to the world of payroll infrastructure. We started off with launching a Payroll API and then expanded to an entire suite of payroll infra tools. We’re truly building the product we wish we had.” The new capital will be used for growing the Zeal team and scaling the product to meet the increasing customer demand. “
— Pranab Krishnan, CTO and Co-Founder of Zeal