Income and employment are typically the two key factors when financial institutions underwrite credit 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 leads to many being unable to access financial solutions at the time they need them. Pinwheel is a payroll data intelligence platform that provides real-time data about a person’s income through API connectivity. Requestors of financial information are able to access payroll data, with the consumer’s permission, for 80% of people employed in the United States. As the United States moves towards more Open Banking and decentralization of individual financial data through portability, Pinwheel is on the way to becoming the leading infrastructure provider that powers the income layer and future innovators in fintech.
AlleyWatch caught up with Pinwheel CEO and Cofounder Kurtis Lin to learn more about the evolution of the business from the health savings account space to payroll data, the company’s plans to scale from 60 employees to 180, other strategic plans, latest round of funding, which brings the total funding raised to $77M, and much, much more…
Who were your investors and how much did you raise?
GGV Capital led our $50M Series B. We received continued participation from Coatue, First Round Capital, TQ Ventures, and Upfront Ventures, 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 that Pinwheel offers.
Pinwheel is the market-leading payroll data connectivity platform building the income layer that will power a fairer financial system. Fintechs and financial institutions alike trust Pinwheel to access the data within traditional and non-traditional payroll platforms to update direct deposits, streamline income and employment verification, improve underwriting, power earned wage access, and build innovative new products. With consumer permissioning, Pinwheel connects to the majority of these providers, covering over 1,400+ platforms and nearly 80% of anyone receiving a paycheck in the US, to enable market-leading fintechs, to easily access and update the payroll data of more than 100 million US-based employed people. Pinwheel is the only provider that handles both direct deposit switching and the provision of income and employment data to be Consumer Reporting Agency (CRA) compliant with the Fair Credit Reporting Act (FCRA).
What inspired the start of Pinwheel?
Initially, we sought out to innovate the Health Savings Account (HSA) space. My cofounders and I discovered that many people were underutilizing their HSAs because they either 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 build and scale the connectivity between someone’s direct deposit and an HSA. We realized that this missing link was critical not just for our idea, but for so many other potential fintech innovations. Thus, the idea for Pinwheel was born.
How is Pinwheel different?
Not only does Pinwheel maintain over a 99.999% uptime while processing monthly volumes of 1M+, but Pinwheel’s coverage includes over 1,400 platforms (more than triple the industry’s average). These platforms range from traditional payroll providers for the Top 100 employers across the nation to unemployment benefits and gig or creator platforms. Uniquely, Pinwheel is not limited to salaried paychecks, but also individual hourly clock-ins. Spanning our coverage across nearly 80% of employed people in the United States is critical for our customers to be able to develop tools and services that can help everyone, especially the large populations of financially unhealthy, or those still considered to be unbanked. Additionally, we are the only company that handles both direct deposit switching and the provision of payroll data to be a Consumer Reporting Agency (CRA) compliant with the Fair Credit Reporting Act (FCRA). With Pinwheel’s consumer permissioned connectivity, it’s now possible for fintechs, financial institutions, and more, to roll out new offerings that benefit consumers through our platform – from earned wage access (EWA), paycheck linked lending, dynamic loan options, and more. The possibilities to create a fairer financial system are exciting and endless.
What market does Pinwheel target and how big is it?
It’s hard to quantify the total addressable market for Pinwheel since we have the ability to impact every American that receives some form of a paycheck, but we anticipate that it’s anywhere between $300-600B.
What’s your business model?
As an application programming interface (API), we have a straightforward model whereby we charge for the usage of the platform.
What are your post-COVID office plans?
We actually just opened our first office in New York City this past year. We have 60 people based there currently, and we’re looking to triple our headcount by the end of the year. Our employees were given the choice to select if they’d like to work remotely or in person. We are advocates for flexible workplaces and are actively hiring for remote and in-person roles.
What was the funding process like?
Our investors believe as deeply in our mission as we do, so we were lucky enough for all of our previous investors to extend additional funds this round.
What are the biggest challenges that you faced while raising capital?
It’s hard for us to quantify our total addressable market. As I mentioned, we have the ability to impact nearly everyone who receives some form of a paycheck.
What factors about your business led your investors to write 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 so many people’s financial lives.
Additionally, we lead the market from a technical perspective as well. Not only does Pinwheel maintain over a 99.999% uptime while processing monthly volumes of 1M+, but Pinwheel’s coverage includes over 1,400 platforms (more than triple the industry’s average). These platforms range from traditional payroll providers for the Top 100 employers across the nation to unemployment benefits and gig or creator platforms. Uniquely, Pinwheel is not limited to salaried paychecks, but also individual hourly clock-ins. Spanning our coverage across nearly 80%.
Additionally, we lead the market from a technical perspective as well. Not only does Pinwheel maintain over a 99.999% uptime while processing monthly volumes of 1M+, but Pinwheel’s coverage includes over 1,400 platforms (more than triple the industry’s average). These platforms range from traditional payroll providers for the Top 100 employers across the nation to unemployment benefits and gig or creator platforms. Uniquely, Pinwheel is not limited to salaried paychecks, but also individual hourly clock-ins. Spanning our coverage across nearly 80%.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
Raising capital is just a means to an end! Some of the best companies in the world were bootstrapped and had a focus on being profitable from day one. The first question you should ask yourself is if you are building a venture-scale business or not. Most companies aren’t. If you are, then be clear with investors about your vision of the world and ensure you can return their investment 100x. If you aren’t, focus on what matters. Build something people truly want and make sure you make a profit with each sale. From that point forward, you control your own destiny and can raise funding if you really want to.
Where do you see the company going now over the near term?
With this funding, Pinwheel plans to triple its headcount to 180 people, with a particular emphasis on engineering roles, to continue work on EWA and to expand into new areas such as tax preparation. Additionally, the company will further its commitment to setting the industry standard for the security of consumer data. 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 switching and the provision of payroll data to be a Consumer Reporting Agency (CRA) compliant with the Fair Credit Reporting Act (FCRA).
What’s your favorite outdoor dining restaurant in NYC?
I am a huge fan of Jeju Noodle Bar in West Village!
