Pento lands $35M to automate payroll processes
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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.”
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.
Above: Pento.io’s online dashboard.
“Payroll has been a manual and arduous process for decades; we experienced this first hand with our first venture — as we had to outsource payroll to third-party vendors, and by having to manually check almost every element of the payroll process every single month — which captured quite a lot of senior leadership time,” Larsen told VentureBeat via email. “We saw the opportunity to help modernize this through automation. Just about every enterprise, especially those with hundreds of employees, could potentially be a Pento customer, so the market opportunity for us is immense.”
Pento imports existing employee data including salary and salary type, tax code, deductions, and pension information from Personio, Hibob, BambooHR, and other software. The platform makes real-time calculations and automates payments, checking for things like whether employees are eligible for pensions and setting the dates for statutory or parental pay.
In addition, Pento has developed an open payroll API, currently in beta, which will allow businesses to build custom integrations to automate workflows such as time-tracking or shift planning. The API will also allow employees to share pay and compensation data with third-party apps and services to validate their income to credit agencies, as well as other financial and HR organizations.
“In the future, one way we could utilize all the data created through Pento would be to enable consumers to share their pay history and pay data with third-party products to get better loans or improved credit scores,” Larsen added. “For instance, instead of having to print six pay slips to show your bank to get a mortgage approved, it could be easier to share the pay data from Pento to streamline the process. This is something we could look to introduce down the line.”
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.”
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