Atlanta-based payroll service provider OnPay has announced the completion of a $6 million Series A funding round from a coterie of individual private investors, exceeding its $5 million goal. OnPay will use the investment to grow its team, expand marketing efforts, develop products, and enhance the company’s customer experience.
“We’ll be hiring engineers and product developers, and building out a new accounts team,” says Mark McKee, president and COO of OnPay. “We just started marketing last year, to generate awareness of the company.”
In a statement, OnPay founder and CEO Jesse Burgess highlighted the funding round as evidence of the company’s growing reputation in the marketplace. “Our rapid growth over the past year signals a significant demand for high-quality payroll services,” he said. “With this funding, we will continue to scale and exceed the expectations of our clients, while focusing on innovative product-led development.”
McKee also noted the unconventional road the company took to find funding. “We took a slightly non-traditional path. We did not raise this [funding round] from institutions. We didn’t raise it from venture capitalists. We raised it from individuals,” says McKee. “What we did was try to raise capital from folks who had been in business before, either from owning their own company, or running a company and having some kind of leadership experience. We were really fortunate to find people who had experience growing businesses quickly, so we could lean on them as OnPay begins to scale rapidly.”
As part of this funding round, former Worldpay U.S. chief executive and FinTech executive Tony Catalfano will join OnPay’s board of directors.
“It was a validation of what we’ve been working so hard on, to have former CEOs of Fortune 1000 companies with fintech back us, because they knew that the opportunity was so great for us to grow quickly,” says McKee. “It was really great to see established FinTech investors who know this space well come in and back us for capital.”
OnPay provides human resources, payroll, and benefits services to more than 10,000 clients across the United States, primarily small and mid-sized businesses. The company aims to modernize an industry that McKee says “hasn’t had a lot of change for a long time.”
“There are over 5 million businesses with 20 or fewer employees in this country. It’s such a huge market, and there are still plenty of people who do [payroll and HR] on Excel spreadsheets, or even in a notebook. There are some incumbents who are big successful companies that have done well, but there is a definite opportunity for people to do HR, payroll, and onboarding differently. We are one of the few cloud-based payroll providers that can service all industries.”
Through OnPay’s cloud-based service, small businesses in all 50 states can handle unlimited pay runs, tax filings and payments, garnishments, unemployment insurance withholding, and more. Human resource staffers can also take care of PTO requests and onboarding tasks with ease. The company also offers software integrations with QuickBooks, Magnify, PosterElite, and other accounting programs.
“We’re very fortunate to be in the right place at the right time, says McKee. “There’s so much demand in this industry for this type of software.”
The Series A funding round caps on an amazing year for OnPay that includes becoming a Xero-certified app partner, the release of a complete set of HR tools, and being named the exclusively endorsed payroll partner for the American Dental Association. However, McKee sees the caliber of the talent he has been able to attract to OnPay as the real testament to the company’s growing industry reputation.
“There are people with so much payments and FinTech experience in this city,” says McKee. “It’s allowed us to be really picky and choosy about bringing people on the team so I’m really proud of who’s here today. We’re continuing to hire and I think that’s the biggest milestone.”