Why Y Combinator Firms Flock to Banking and HR Startups Every Year

Rajeev Behera’s new all-in-one HR startup, called Every, is either brilliant or crazy.

Crazy, because multi-module HR software that handles payroll, onboarding, and expense management for small businesses is already a crowded market. Competitors include unicorn startups Gusto, Rippling, and Deel; incumbents that are strong in one area and expanding into others, like Mercury and Brex; and a slew of smaller startups like Finally, Paylocity, and AccountsIQ.

Every’s investors clearly think Behera’s particular take on the idea is brilliant. Every just raised $22.5 million in a Series A round led by Alex Bard of Redpoint Ventures, with participation from Y Combinator, Okta Ventures, and Rexhi Dollaku of Base10 Partners, TechCrunch can exclusively report.

Behera’s unique — and arguably brilliant — game plan centers on his target customers and what he offers to attract them.

He and his co-founder, Barry Peterson, have taken Every to very early tech startups and will help them prepare their incorporation documents for free, then set up a business bank account, among other back-end essentials. Every makes money by charging monthly SaaS fees for other modules, such as accounting and interchange fees.

“We spent all this time building out some pretty advanced expense management, banking, payroll, all of that. Now we’re going to open up the ability for founders to sign up and just give it away for free,” Behera said.

After a 30-minute, white-glove onboarding session, startups receive an integrated suite of banking, HR, HR onboarding, HR benefits, accounting, taxes, state compliance, and more. (As we recently reported, state compliance is especially complicated for startups.) Every customers also get a Slack channel where they can commiserate with other founders.

His customers “don’t even look” at competitors like Rippling once they’ve incorporated, he says, because they’ll already have a bank account with Every and can easily add other modules. “That’s our strategy,” he said.

The company is currently targeting startups with fewer than 200 employees, not the growth-stage, deeper-pocketed customers that its larger competitors dominate. The software is intended to support them for the first five years.

The other crazy thing is that Behera imagines that his fastest-growing customers will “leave” Every, at least until the day Every itself becomes a growing fintech company with software that can service larger customers.

Y Combinator Connection

But perhaps his real secret is his ties to Y Combinator.

Everyone was in the Summer 2023 group. Behera, at 42, didn’t have to learn the ropes of a startup at YC. He’s best known for co-founding HR firm Employee Reviews Reflektive and selling it to Learning Technologies Group in 2021 for an undisclosed amount after it raised more than $100 million in venture capital funding from the likes of Andreessen Horowitz and TPG.

He’s also married to Surbhi Sarna, who founded and sold nVision Medical to Boston Scientific for $275 million in 2018. He’s now an advisor to YC. So Every has grown its client base by being close to the Valley’s leading startup factory. About half of its roughly 150 clients come from YC’s network, Behera said.

On the other hand, Rippling, Brex, Gusto, and Deel are also YC alumni who have access to the same YC network. So Every’s competition with these larger companies is also built in.

Behera took two years off after selling his last company. “I ran the company for eight years. I was pretty burnt out,” he said.

But in another possible sign of madness, he’s approaching his next HR startup the hard way: Instead of partnering with other fintech firms to build modules, he and Peterson — his former head of engineering at Reflektive — coded all of their HR, payroll, and banking products from scratch.

Just two months ago, he was handling all sales, acquiring the first 50 customers, customer service, as well as product specifications and designs.

Then came help in the form of Bard, his seed investor at Redpoint. Bard called to lead a Series A (“preemptive” deal, as they say in the VC world). Other VCs got involved because they heard from their portfolio companies that were already using Every, Base10’s Dollaku said.

“Rajeev told us what he was building, and we funded it with a Series A,” Dollaku said. “A lot of founders had used Every, and that’s how investors first heard about Every. Because he wasn’t raising money. He didn’t have to.”

The Series A deal closed in about two weeks, Behera said. He didn’t disclose the company’s valuation, but said it was a standard 20% round, which by our calculations should give it a valuation of about $112.5 million. It currently has about 20 employees and will use the money to hire and expand, primarily its engineering team, as well as to pay for its fee-free business model for starting and onboarding new employees.