Axios: Fayetteville's Zenwork wins $163M investment

Fayetteville's Zenwork wins $163M investment

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, 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.

Article written by Worth Sparkman, Axios.

The specific companies identified above do not represent all of Spectrum’s investments, and no assumptions should be made that any investments identified were or will be profitable. View the complete list of our portfolio companies. Spectrum is not responsible for the contents of any third party website linked above, and has not confirmed the accuracy of any information provided therein.