Payroll API Provider Zeal Announces $13 Million Series A
FinTech’s record-breaking year rolls on as the payroll API provider Zeal has announced a $13 million funding round. The Series A was led by Spark Capital with Commerce Ventures and various individual investors also participating. Among those numerous individual investors, one of the most notable is Robinhood co-founder and CEO Vlad Tenev. This latest funding comes nearly 18 months after the startup’s $1.6 million seed round and brings their total investment to date up to $15.4 million.
Originally known as Puzzl, Zeal bills itself as “a leader in the embedded FinTech ecosystem.” In particular, the company’s API allows software as a service (SaaS) startups to integrate payroll systems into their products. The platform can also be used by direct employers to build their own payroll solutions. Currently, Zeal is live in all 50 states as well as in American territories, supporting both W2 employees and 1099 payments for independent contractors. In each case, Zeal handles all of the backend logistics including compliance by working with a team of tax attorneys, payroll specialists, and other experts.
Speaking to the need for Zeal’s offerings, the company’s CEO and co-founder Kirti Shenoy explained, “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.” Shenoy added, “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.”
Spark Capital partner and now Zeal board member Natalie Sandman said of the company, “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 The one-size-fits-all payroll product is outdated and Zeal makes it simple for any business to create the payroll product that fits their unique needs.”
To Sandman’s point, “embedded FinTech” and other “behind the scenes” startups have proven to be popular investments among venture capital firms this year. For example, DriveWealth — which powers fractional stock trading offerings used by Revolut and others — just closed a $450 million Series D earlier this month. Similarly, “FinTech as a service” platform Rapyd recently announced a $300 million Series E as well. As for early-stage investments, Play2Pay garnered a $13 million Series A to expand its gamification platform, which is already employed by such offerings as Cricket Wireless’s “Ad It Up” app.
Overall, Zeal’s Series A speaks to several trends currently on display in FinTech funding. First, it highlights the continued early-round investment that’s occurring even amid the onslaught of $100 million+ “megarounds.” Second, as mentioned, it shows that startups don’t need to be front and center with their own customer-facing products to garner attention from investors. By intentionally taking a behind-the-scenes role and helping other startups improve their products, Zeal could certainly go far as FinTech and SaaS markets continue to grow.