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TechHuman Capital

This Zenefits Rival is Tech’s Latest Unicorn

By
Heather Clancy
Heather Clancy
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By
Heather Clancy
Heather Clancy
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December 22, 2015, 12:06 PM ET
Gusto plans a grand opening for its Denver office in January 2016.
Gusto plans a grand opening for its Denver office in January 2016.Courtesy of Gusto
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Three-year-old Gusto, formerly known as ZenPayroll, has raised another $50 million from several existing backers at a valuation of more than $1 billion. That’s about double what it was worth after its $60 million round back in April, said the company’s founder and CEO Josh Reeves.

But Reeves prefers to talk up another milestone metric: The human resources software startup’s payroll and benefits services are now used by approximately 25,000 small businesses, up from 20,000 in September.

By comparison, the last reported customer number for rival Zenefits was around 10,000. (To be fair, that was back in June, so the data is pretty outdated.)

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The two companies became more competitive in recent months after Gusto expanded from its legacy as a payroll service provider. It now sells health insurance in California, and plans to add additional states early in 2016. Zenefits likewise expanded its horizons this fall, adding a payroll service last month. It began working on the service last summer after a bitter dispute with ADP.

Gusto’s latest funding disclosure was made in an SEC filing late last week. Reeves described the round as “opportunistic,” one that the company decided to complete after being approached by existing backers like Google Capital and General Catalyst. “We weren’t planning to raise this quarter, but several folks wanted to give us more support,” Reeves told Fortune.

WATCH: Learn more about payroll services for small businesses.

Like Zenefits, Gusto is scaling quickly. It employs 300 people, including 40 in its new Denver office. The grand opening for that location is planned for next month. Gusto could hire as many as 1,000 people in Colorado over the next several years.

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