The only thing worse than paying for work-related expenses out of pocket is the process for submitting expense reports and getting paid back.
There are small-dollar purchases that employees make all the time. It could be something banal, like paper clips, or a bit more spendy, like taking a colleague or client to lunch. For companies, incidentals like these are just part of the cost of doing business. For employees, though, saving receipts and producing expense reports is a pain, and approving lots of small expenses bogs down even the best HR departments.
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Zestful is a Denver-based startup seeking to streamline that process by giving employers the option to issue employees debit cards with a few strings attached. Zestful lets employers place limits on what employees can spend, and what they can purchase. For example, a company could earmark $75 per employee per month for personal fitness-related expenses or grant a $50 per month allowance which employees can use however they wish.
Today, Zestful unveils $5 million in additional seed financing. Thrive Capital led the deal, in which Third Kind Capital and BoxGroup also participated as new investors. Y Combinator, Shrug Capital, and Matchstick Ventures—backers from prior rounds—followed on in this deal.
According to Crunchbase data, Zestful has raised at least $6.2 million in venture backing, including this round. Crunchbase News covered the first tranche of Zestful’s seed round, which netted the company $1.1 million in startup capital, back in January 2019. Zestful participated in Y Combinator’s Winter 2017 cohort.
Though the funding news was made public today, the deal was disclosed through a regulatory filing which we spotted back in late July. That SEC disclosure listed Thrive Capital investor Josh Miller as a new non-executive director on the company’s board.1 The filing states that convertible securities from prior rounds were converted in this round, suggesting that this is the first priced round raised by the company. Valuation details were not disclosed.
“Everything today is so personalized, but somehow the perks your employer gives you are still a one-size-fits-all. By giving people a balance that they can spend anywhere they want, you’re actually giving them the ability to use their work perks to benefit their personal lives,” said Zestful co-founder and chief executive Mat Vogels in a statement. “With this new round of funding we’ll be able to make Zestful that much better and continue expanding to companies of all shapes and sizes.”
Employers can elect to roll unspent funds from prior months into the next one, or to have balances reset, as Crunchbase News previously reported. Additionally, employers may reward good work with, say, a Netflix or Spotify subscription, or a couple dinners’ worth of takeout through DoorDash or Postmates. A company with a remote team could give employees outside the main office a meal plan option, bringing them up to parity with the folks at HQ. There are several other use cases Zestful highlights on its website. Offering perks like these are often cheaper than cash bonuses and promotes a sense of fealty between companies and their employees.
The company says it’s growing quickly: 80 percent month-over-month. Zestful says it’s expanded its perks catalog to over 1,300 options and has facilitated more than 300 donations to charity, another perk employers can offer through the company’s web-based platform. Zestful also says it’s onboarded customers at 100 companies across 14 countries.
Zestful claims its customers range in size from a dozen or so employees to “traditional enterprises with hundreds to thousands of employees.” It has a business incentive to swing for the fences on large enterprise sales. The company prices its service at $5 per person, per month.
Of course, Zestful is not the only company issuing purpose-built payment cards to business employees. Lehi, Utah-based Divvy has raised over $250 million in venture backing for its expense tracking system, built around a “smart” corporate credit card. In a similar vein is Brex, the San Francisco-based company behind a corporate credit card program it says is tailored to startups and internet-first brands. Brex is funded to the tune of over $382 million, according to Crunchbase data. All these credit card-based companies have their role in the business, but Zestful’s product-segmented personal micro slush fund-as-a-perk is, for now, rather unique.
Zestful currently has ten employees and aims to launch a mobile app, integrations with external services like Zapier and Slack, and will continue adding features to the administrative side of its service as well.
Illustration: Li-Anne Dias
It should also be noted that the $6.52 million figure cited in the filing includes the conversion of pre-existing SAFE and convertible note instruments.↩