Why We Invested in Salsa
Thrilled to announce our investment in Salsa, a payroll-as-a-service company.
At Better Tomorrow Ventures, we think there is a massive opportunity to improve the payroll experience. Payroll solutions have remained largely unchanged in the last few decades and have resisted industry specialization, largely following the same process of entering data manually or via spreadsheets through standalone systems.
Today, payroll remains clunky and often has a poor user experience, trapped in horizontal software, and therefore removed from the platforms that companies use to manage their business. Despite that, it's a HUGE business. ADP and Paychex alone are ~$130B in market cap.
Software companies already track things like working hours, commissions, tips, jobs completed, etc., but are forced to manually re-enter those payroll inputs into payroll software every two weeks. The core system of record business workflow is primed to add fintech components, but payroll is a difficult product to build.
Not only that, but integrating with existing payroll providers is a big lift. Furthermore, it is incredibly difficult to build and maintain payroll products as there are over 7,400 tax jurisdictions in the U.S. and tax regulations change frequently. But the market is huge — over $8.8 trillion worth of payroll is processed annually, and there are 150 million U.S. employees receiving payroll.
Salsa is changing this by offering an API that can be embedded into software platforms to empower those platforms to build their own payroll products.
Salsa abstracts the complexity of building payroll products by automating compliance requirements, calculations, tax filing, and money movement, capitalizing on the opportunity to integrate payroll into the platforms that businesses are already using. This provides these companies with an additional revenue stream and makes their relationships with their customers even stickier.
I've known John Kramer, the CEO and co-founder, for years. In fact, we explored issues that John experienced earlier in his career at Honeybook that could be potentially solved by a tech company. Eventually, the idea for Salsa came up. We loved it, so we encouraged John to take the plunge and, once he did, we invested!
Salsa has had customers go live using the product for a year and has a pipeline of additional companies going live in a month. If you are a vertical SaaS company, business management software platform, neobank, staffing agency, or workforce management company in the U.S. or Canada looking to create your own payroll tool, get in touch!
Great to join up with our buddies Will at Greycroft, Weston and Thabet at Definition, Rex at Cambrian, and Michael at Forum Ventures, along with angels: HoneyBook CEO, Oz, AngelList CEO, Avlok, inDinero co-founder, Jess, Coast CEO, Daniel, Searchlight CEO, Kerry, DocSend co-founder, Russ, Human Interest co-founder, Roger, Kanmon CEO, Mengxi, and Shyft CEO, Alex.
