Fayetteville-based tax software company Zenwork recently closed a $163 million minority growth equity transaction led by Spectrum Equity, a growth equity firm focused on internet-enabled software and information services companies.
According to Spectrum Equity, which is based in Boston and San Francisco, the investment is the largest growth equity funding in Arkansas in recent years and exemplifies the company’s core belief that “great, capital-efficient businesses can be built anywhere and frequently exist outside of the traditional Bay Area and Northeast tech hubs.”
Founded in 2009, Zenwork provides digital tax compliance and regulatory reporting software and operates under the Tax1099 and Compliancely brands. According to a news release, the investment will allow Zenwork to accelerate product innovation and meet growing business demand for modern, automated technology that address regulatory compliance and power electronic filing and information management.
“We are thrilled to partner with Spectrum Equity, whose experience scaling RegTech software and data businesses will help us navigate this next growth chapter,” said Sanjeev Singh, co-founder and CEO of Zenwork. “Zenwork will be investing heavily in our Tax1099 and Compliancely platforms as we look to be the digital tax compliance partner of choice to all businesses.”
According to Spectrum Equity, Zenwork is expected to double the number of its employees in Arkansas over the next 12 months. It has nearly 20 employees in Arkansas and about 80 employees in India.
Zenwork serves more than 100,000 small businesses, including 30,000 CPA firms, and large companies in the United States. It’s added 40,000 new clients in each of the past two years and processed millions of electronic filings and over 12 million business identity and compliance checks annually for its clients.
“As a bootstrapped company, Zenwork has achieved remarkable success to date by focusing relentlessly on the digital tax reporting and onboarding requirements of its diverse customer base,” said Adam Margolin, managing director at Spectrum Equity. “With millions of businesses subject to tax informational reporting and likely to adopt e-filing over the coming years, we see a massive opportunity for Zenwork to build on its market leadership position through product investments and innovation. With this significant new investment, we look forward to partnering with Sanjeev and the rest of the Zenwork team on their ambitious growth plans.”
Along with the transaction, Margolin and Cameron Ghorbani of Spectrum Equity will join Zenwork’s board of directors.