Pento, a payroll automation firm based in the U.K., today announced that it secured $35 million in series B funding led by Tiger Global and Avid Ventures, bringing its total capital raised to $53.4 million. General Catalyst, Latitude, and Seedcamp also participated in the tranche, which cofounder and CEO Jonas Bøgh Larsen says will be put toward product development, service growth, partner integrations, and expansion into new European countries.
It's estimated that 82 million U.S. employees -- or 54% of the American workforce -- are affected by various payroll problems. The consequences can be severe for enterprises already suffering from worker shortages exacerbated by the pandemic. According to a recent survey from the Workforce Institute at Kronos Incorporated, 49% of workers will start a new job search after experiencing only two problems with their paycheck.
Perhaps unsurprisingly, a growing number of businesses are turning to automation as a potential solution. A 2019 EY report found that companies "continue to invest heavily in emerging technologies, with a high percentage of surveyed organizations either using or planning to use intelligent automation and chatbots for payroll processing and interaction with employees."
Automating payroll
Launched by Larsen and Emil Hagbarth Rasmussen in 2017, Pento's software-as-a-service product streamlines tax calculations and integrates with tooling, banking, human resources (HR), and accounting systems. Rasmussen and Larsen, who previously cofounded two ecommerce startups, Hivebeat and Greenticket, describe Pento as an all-in-one solution for payroll automation.
Growing adoption
In a 2018 Deloitte study, only 6% of companies said that they were using some aspect of process automation for payroll processing. But 16% of respondents to the same study said that they were planning to use automation in the near term, with 5% saying they were already piloting it as part of their payroll operations.
Seventy-employee Pento -- whose competitors include Botkeeper, Employment Hero, and Zeni -- says it's observed an uptick in business as the pandemic motivates companies to embrace digital transformation. Since the start of 2021, revenue has increased ten times, and companies across tech, hospitality, retail, and ecommerce have signed on.
"The pandemic has meant that more companies have started evaluating whether the manual processes they had before were still working well when working remotely," Larsen said. "Any software-as-a-service product will tell you it's forced people to reconsider some of the processes and move more of those to the cloud. Pento has benefit from this shift in thinking."