Guideline, the self-described easy, affordable 401(k) for small business, today announced that it has raised over $80 million for its Series D equity round.
The round was co-led by Generation Investment Management and Greyhound Capital, with
participation from existing investors Tiger Global Management, Felicis Ventures, Propel Venture
Partners, Lerer Hippeau, Xfund and BoxGroup
Guideline was founded five years ago by Kevin Busque, Mike Nelson and Jeremy Caballero with the goal of creating a 401(k) that prioritized participant savings but didn’t require a financial degree to understand. Today, more than 13,000 small businesses trust Guideline to manage more than $2.5 billion in retirement assets.
Incumbent 401(k) providers have historically found it too difficult to cater to and turn a profit on small businesses, particularly as small businesses are generally not an ideal fit for the assetbased fee model predominant in the industry. Guideline is leveraging its technology to close this retirement-savings gap.
“Retirement savings are crucial to building financial security, but 40% of working-age Americans have no retirement-account savings at all,” said Shalini Rao, Director in Growth Equity at Generation. “America’s rate of old-age poverty is one of the highest amongst developed countries. Due to outdated pricing models, traditional 401(k) providers have failed to service millions of small businesses and their employees. We think Guideline has the potential to solve this market failure. It is democratizing access to 401(k)s by making the process cheaper, more transparent and more sustainable.”
Through its full-stack software solution, Guideline has built technology that automates what’s usually outsourced, making pricing not just accessible for businesses of any kind, but also affordable. Guideline bills like a software company – with a flat monthly fee charged to the employer – which means that participants’ accounts are not put at an automatic growth disadvantage, as has historically been the case. Whereas legacy provider business models have put profits first, Guideline advances the interests of employees by giving them the opportunity to save as much as possible for retirement.
“I couldn’t ask for better partners than Generation and Greyhound as we further expand the platform to better serve the small business community and beyond,” said Kevin Busque, CEO and co-founder, Guideline. “I’m excited to pair their expertise with our own as we work to grow our partner ecosystem, integrate with more service providers that support the small businesses we work with, and dedicate even more resources to the needs of our participants. After all, we still have much more work to do. According to our research, there are nearly 6 million small businesses in this country and 90 percent of them still do not offer their employees a 401(k). So, back to work we go.”