Handling employee benefits is a headache for companies, especially small ones, and Justworks Inc. has raised $6 million to make it easier.
The startup has software that packages corporate benefits by aggregating multiple companies into a single entity, negotiating lower rates and eliminating the need for each company to deal separately with numerous corporate and government agencies.
The Series A round was led by Thrive Capital and includes Index Ventures, which provided a $1 million seed round for Justworks last year.
Justworks founder and Chief Executive Isaac Oates said the idea for Justworks developed over several years—at Amazon.com Inc. where he worked on transaction processing systems; at Adtuitive, a startup he founded where he discovered how hard it was to set up payroll; at Etsy Inc., which bought Adtuitive and where he built Etsy’s payments platform while also running human resources; and in the U.S. Army, where he experienced government bureaucracy and the need to avoid potential fraud.
“Part of what’s so painful about benefits is that the requirements put upon a small business are not that different from what a large business has to do, except that a large business can afford to hire people to manage it,” Mr. Oates said.
Based in New York, Justworks launched its service about a year ago and now has more than 2,000 companies on its platform, which is available in 43 states. The new money will be invested in the product and also in marketing and sales. Mr. Oates said the company has done no marketing.
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