Zeal (formerly Puzzl), an API-first payroll infrastructure provider, today announced a $13 million Series A round 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. The round follows a $1.6 million seed investment led by Long Journey Ventures, Box Group, and Scott & Cyan Banister. Zeal also announced it has added Spark Capital’s partner Natalie Sandman to its Board of Directors.
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Zeal CTO & co-founder Pranab Krishnan and CEO & co-founder Kirti Shenoy (Photo: Business Wire)
Zeal is a leader in the embedded fintech ecosystem, empowering platforms to build highly individualized payroll products. 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. Software platforms that sell B2B services use Zeal to build their own payroll product to sell to their customers. 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 live in all 50 states and American territories, and helps platforms process payroll for W2 employees and payments for 1099 contractors.
“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.,” said Kirti Shenoy, Zeal CEO and Co-Founder. “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.”
Zeal’s mission is to touch every American paycheck with its tax and payment technology, and to ensure that American employees are paid correctly and efficiently. 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 more than 40 percent of small- to-medium size businesses pay at least one payroll penalty per year. In 2019 alone, the IRS levied almost 5 million penalties related to payroll taxes, totaling $13.7 billion. Zeal is tackling 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.
Traditionally, platforms have layered together antiquated third-party payroll solutions and have spent millions of dollars in recurring consulting fees to build a custom payroll product. Zeal powers modern payroll solutions for companies innovating new technology to pay workers in the digital age, allowing them to transition from legacy, piecemeal software to a modern API solution. Zeal takes on the payroll liability and stays hidden in the background while handling the backend logistics with a team of tax attorneys, payroll specialists, and payment specialists.
“Zeal is poised to lead a new category of embedded fintech,” said Spark Capital partner Natalie Sandman. “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.”
Zeal was founded in San Francisco in 2019 and part of Y Combinator’s 2019 cohort. The founders were inspired to build payroll infrastructure from hardships they faced running their very own labor marketplace. “At our peak we had thousands of 1099 contractors on our platform and were processing high volumes of payments ourselves,” said Pranab Krishnan, CTO and Co-Founder of Zeal. “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.
Zeal powers the possibilities of payroll with its API-first infrastructure. Zeal’s technology empowers HR, staffing, vertical SaaS, point of sale, gig staffing, and back office platforms to build highly individualized payroll products for their own users – while Zeal sits hidden in the background – to ensure that American employees and businesses are paid correctly and efficiently. Learn more at Zeal.com
About Spark Capital
We are Spark Capital, investors in products we love by creators we admire, including Affirm, Carta, Cruise, Discord, Oculus, Plaid, Postmates, Slack, Twitter, and Wayfair. We know there are no playbooks or formulas for success and are here to help founders win their own way. We invest across all sectors and stages, and work out of San Francisco, Boston, and New York City.