Pinwheel raises $50 million for its payroll API that makes the financial system fairer

Income and employment are usually the two key factors when financial institutions take out credits and loans. While most receive paychecks every two weeks, financial decisions are made largely based on the previous year’s tax return. This paradigm results in a lack of flexibility that prevents many people from accessing financial solutions when they need them. Reel is a payroll data intelligence platform that provides real-time data on a person’s income through API connectivity. Financial information requesters can access payroll data, with consumer permission, for 80% of employed people in the United States. As the United States moves toward more Open Banking and the decentralization of individual financial data through portability, Pinwheel is poised to become the leading infrastructure provider powering the revenue layer and future innovators of fintech.

Alley Watch met the CEO and co-founder of Pinwheel Kurtis Lin to learn about the company’s evolution from the health savings account space to payroll data, the company’s plans to grow from 60 employees to 180, other strategic plans, the latest round of funding, bringing total funding raised to $77 million, and much more…

Who were your investors and how much did you raise?

GGV Capital led our $50 million Series B. We received continued participation from Coatue, first round of capital, TQ Ventures, and Initial companies, as well as new investments from strategic partners, including AMEX Ventures, Indeed, Kraken Ventures, Franklin Templeton, and more.

Tell us about the product or service offered by Pinwheel.

Pinwheel is the market-leading payroll data connectivity platform that builds the revenue layer that will fuel a fairer financial system. Fintechs and financial institutions trust Pinwheel to access data from traditional and non-traditional payroll platforms to update direct deposits, streamline income and employment verification, improve enrollment, to access earned wages and create new innovative products. With consumer permission, Pinwheel connects to the majority of these providers, spanning over 1,400 platforms and nearly 80% of anyone receiving a paycheck in the United States, to enable market-leading fintechs easily access and update payroll data for more than 100 million people employed in the United States. Pinwheel is the only provider that manages both the change of direct deposit and the provision of income and employment data to comply with the Fair Credit Reporting Act (FCRA).

What inspired the start of Pinwheel?

Initially, we sought to innovate in the Health Savings Account (HSA) space. My co-founders and I discovered that many people were underutilizing their HSAs because they couldn’t provide the funding or found it very difficult to set up, so we wanted to change that. Along the way, we discovered that it was incredibly difficult to create and scale connectivity between a person’s direct deposit and an HSA. We realized that this missing link was essential not only for our idea, but for so many other potential fintech innovations. Thus, the idea of ​​Pinwheel was born.

How is Pinwheel different?

Not only does Pinwheel maintain over 99.999% uptime while handling monthly volumes of over 1 million, but Pinwheel’s coverage includes over 1,400 platforms (over triple industry average). These platforms range from traditional payroll providers for top 100 employers across the country to unemployment benefits and gig or designer platforms. Uniquely, Pinwheel is not limited to employee paychecks, but individual hourly clockings as well. Expanding our coverage to nearly 80% of employed people in the United States is essential so that our customers can develop tools and services that can help everyone, especially large populations of people in financial ill health or those who are still considered unbanked. Additionally, we are the only company that handles both direct deposit change and payroll data provision to be a Fair Credit Reporting Act (FCRA) compliant Consumer Reporting Agency (CRA). With Pinwheel’s consumer-authorized connectivity, it’s now possible for fintechs, financial institutions, and more to roll out new offerings that benefit consumers through our platform – from Access to Earned Wages (EWA), paycheck-linked loans, dynamic loan options, and more. The possibilities for creating a fairer financial system are exciting and endless.

What is Pinwheel’s target market and how big is it?

It is difficult to quantify the total addressable market for Pinwheel since we have the ability to impact every American who receives some form of paycheck, but we expect it to be between $300 billion and $600 billion.

What is your business model?

As an Application Programming Interface (API), we have a simple model where we charge for using the platform.

What are your post-COVID office plans?

In fact, we just opened our first office in New York last year. We currently employ 60 people there and plan to triple our workforce by the end of the year. Our employees were given the choice to choose whether they wanted to work remotely or in person. We champion flexible workplaces and are actively recruiting for remote and in-person positions.

How was the funding process?

Our investors believe as deeply in our mission as we do, so we were fortunate to have all of our previous investors grant us additional funds for this round.

What are the biggest challenges you have faced when raising funds?

It is difficult for us to quantify our total addressable market. As I mentioned, we have the ability to impact almost anyone who receives some form of paycheck.

What factors about your business made your investors sign the check?

I believe it came down to the market opportunity coupled with the company’s mission to build a fairer financial system. Together, these two factors uniquely position Pinwheel to positively reshape the financial lives of so many.

In addition, we lead the market from a technical point of view as well. Not only does Pinwheel maintain over 99.999% uptime while handling monthly volumes of over 1 million, but Pinwheel’s coverage includes over 1,400 platforms (more than triple the industry average). These platforms range from traditional payroll providers for top 100 employers across the country to unemployment benefits and gig or designer platforms. Uniquely, Pinwheel is not limited to employee paychecks, but individual hourly clockings as well. Covering our coverage on almost 80%.

In addition, we lead the market from a technical point of view as well. Not only does Pinwheel maintain over 99.999% uptime while handling monthly volumes of over 1 million, but Pinwheel’s coverage includes over 1,400 platforms (more than triple the industry average). These platforms range from traditional payroll providers for top 100 employers across the country to unemployment benefits and gig or designer platforms. Uniquely, Pinwheel is not limited to employee paychecks, but individual hourly clockings as well. Covering our coverage on almost 80%.

What advice can you give to New York businesses that don’t have a fresh injection of capital into the bank?

Raising capital is only a means to an end! Some of the best companies in the world started and focused on profitability from day one. The first question you need to ask yourself is whether or not you are building a large-scale business. Most companies are not. If so, be clear with investors about your view of the world and make sure you can return their investment 100 times. If not, focus on the essentials. Build something people really want and be sure to make a profit with every sale. From this point on, you control your own destiny and can raise funds if you really want to.

Where do you see the business going now in the short term?

With this funding, Pinwheel plans to triple its workforce to 180 people, with a particular focus on engineering roles, continue working on EWA, and expand into new areas such as tax preparation. Additionally, the company will continue its commitment to setting the industry standard for consumer data security. Last year, Pinwheel received its SOC2 Type 2 compliance. Not only is Pinwheel the only payroll data provider to have a CISO, but it is also the only company that handles both direct deposit transfer and providing payroll data to be a Fair Credit Reporting Act (FCRA) compliant consumer reporting agency (CRA).

What’s your favorite outdoor restaurant in New York?

I’m a big fan of Jeju Noodle Bar in West Village!


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Don F. Davis