Payable, a company that graduated from Y Combinator last summer, has raised $2.1 million in its seed round of funding. Investment was led by Freestyle Capital, Redpoint Ventures, Sherpa Ventures, Lerer Hippeau Ventures, Rothenberg Ventures, Haystack, Moment Ventures and other angel investors.
The founders of the company are Tad Milbourn, Kyle Kilat and Peter Terrill. Initially it was known as “Tiempo” when it went through the Mountain View accelerator. Now known as Payable, the company is located in San Francisco. It has seven employees, and in the last four months, has achieved 50% month-over-month growth in its business.
Payable started with offering a free-time tracking app available for iOS, Android and the web. It was developed to help individuals and companies keep a track of their employees’ working hours to pay them faster.
"We all worked at Intuit, and either during that time or before then, we all worked as 1099 contractors. We were face-first into all the issues that impact small businesses, enterprises and the contractors themselves," Milbourn said to the Silicon Valley Business Journal.
But Milbourn said that Payable has since found a significant demand for its app from businesses that are using Payable to manage and pay contractors, and that it helps the contractors themselves.
"We are streamlining things to the point where contractors who were only getting paid on a monthly basis are now getting paid on a weekly basis," Milbourn said to the Journal.
As per Milbourn, on-demand economy companies are dealing with such large numbers of contractors that they need help.
The company’s business model is software-as-a-service. The pricing strategy of the company is $8 per contractor per month with an additional $25 monthly fee in case a business has more than five users.
"The on-demand economy is the normal contractor economy but cranked up to 11," Milbourn said to the journal. "The workers move faster, they churn through faster and it highlights all these workplace complication issues in a different way. These issues have been going on for decades but the technology really accelerates it.
“It doesn't matter much if some of the big players shift back to classifying people they work with as employees rather than contractors,” Milbourn said.
"At its heart, our product is a payment system," he said. "But regardless of that, while on-demand is the hot topic and focus of so much attention, it is just a sliver of the total contractor economy."
According to Milbourn’s estimates, out of the tens of millions of contractors only 10% are working in the on-demand economy.
HR processes including payroll, compliance and benefits didn’t undergo much change for several decades and had inherent issues. We have seen how the technology companies started innovating in and around HR processes; companies like Payable are working towards this direction.