Employease Gets $20M Raise

Just six years out of college, John Alberg and Mike Seckler have already secured $37 million in venture financing for Employease Inc., their Internet-based solution for managing bothemployee benefits and payroll information.

The latest capital infusion was a recent $20 million Series D deal led mezzanine financier Bowman Capital. Bowman put $10 million into the transaction and was joined by additional participants Hummer Winblad Venture Partners, SSM Ventures, Lovett Miller & Co. Inc., Madrona Venture Group and 21st Century Internet Venture Partners.

Although the Atlanta-based issuer received $60 million worth of bids, the round was capped at $20 million to avoid any further dilution.

“Bowman is high quality money,” Seckler said. “They gave credence to our valuation, a halo effect.”

Proceeds from the deal will be used help Employease continue along its steep growth trajectory. More specifically, the capital will be poured into sales and marketing efforts, ramping up the direct sales force, launching an advertising campaign and creating additional third-party distribution relationships. The company is also looking to expand its product offerings.

“We want to get big fast. That’s our goal right now,” Seckler said.

Employease scored an initial $1 million from Federal Partners late in 1996, followed by a $5.75 million Series B deal in early 1998 led by Hummer’s $4.5 million participation.

SSM Ventures and Noro-Moseley Ventures co-led the third round of venture financing in early 1999, each taking a $3 million slice of the $10 million deal.

“The company was well-suited to our investment objectives – a company in an expansion phase, a transition property that has a product and has customers,” said Matthew Cowan, principal at Bowman. “We’re looking to invest where we can grow faster and scale faster.”

Although Cowan could not quantify that growth, he said Bowman would only invest in companies which have revenue projections hovering around $1 billion.

Employease currently counts 900 employers and 70 service providers as customers, including Comfort Systems USA Inc. and OceanSpray Cranberries Inc.. Contracts are administered on a per employee basis, with Employease charging $3 to $7 per month for a benefits administration software platform.