Fayetteville's Zenwork wins $163M investment
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Illustration: Eniola Odetunde/Axios
A little-known Fayetteville technology company just landed a pile of cash to help it grow.
What's happening: Tax and regulatory compliance software firm Zenwork, developer of the service Tax1099, last week raised $162.5 million in minority investment from Boston-based Spectrum Equity.
Why it matters: The investment signals confidence in a technology company conceived and built in Northwest Arkansas.
- It's nearly twice as much of the venture capital invested in Arkansas companies during the first nine months of the year ($89.7 million).
Driving the news: The pandemic helped turn more of the U.S. workforce into part-time contractors, a trend already predicted to be as high as 52% by 2023. Businesses of all sizes use contractors and Zenwork's Tax1099 software decreases time spent filing 1099s (a contractor's version of a W-2 showing income earned).
- The IRS projects that more than 3.6 billion withholding documents and nearly 107 million 1099-MISC forms will be filed in 2021.
Context: Founded in 2011 as Tech Atlantis, Zenwork's software is focused on streamlining tax compliance and regulatory reporting. It's part of the so-called RegTech (regulation technology) industry.
- This is the first time Zenwork has accepted outside investment.
- The company has been profitable every year since it launched, CEO Sanjeev Singh told Axios.
By the numbers: More than 100,000 small businesses in the U.S. use its services, including about 30,000 certified public accounting firms, Singh said.
- Berkshire Hathaway, Mars and Allbirds are some of its larger clients.
Of note: Spectrum Equity, which specializes in Internet, software and information services companies, has previously invested in Ancestry.com, Survey Monkey and GrubHub, to name a few.
- Spectrum will have two seats on Zenwork's board of directors.
What to watch: Zenwork employs about 80 people between its main office in Fayetteville and another office in India. Singh said that number will likely double in the next year.
- There are no current plans to relocate the company, Singh told us.
Editor's note: The headline has been updated to correctly round up the investment Zenwork raised, to $163 million.