Gusto announced that it has raised $200 million from Fidelity Management & Research Company and Generation Investment Management, the firm founded by former U.S. VP Al Gore. That brings the total VC raised to date to an estimated $516 million. This is the second largest HR technology round we’ve tracked in calendar 2019. Gusto founder told TechCrunch that with this investment they plan to expand R & D resources in New York City and look to introduce new features like ondemand pay and support for healthcare benefits.
Gusto focuses on the SMB and is known to be effective for firms with less than 50 employees. They’re also known for not scaling past that size. The segment of employers with less than 100 employees is the largest employer segment in the U.S. and it’s getting increased focus from both existing and new HR tech players. This smallest part of the SMB market is known to be fickle – perhaps Gusto should earmark some of these new funds to focus on payroll and service delivery before extending its platform.
Source: SMB payroll startup Gusto raises $200M Series D, plans R&D expansion to NYC | TechCrunch