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ASP - Friday, April 29, 2005

PayCycle - Profile

HQ: Palo Alto, CA

Founded: 1999

Management: Jim Heeger came on as CEO in February 2005. Heeger was SVP of Adobe and claims responsibility for launching Adobe Creative Suite, Adobe Illustrator CS, and Adobe InDesign® CS. Prior to Adobe, he was CEO of Fotiva, a photography software company acquired by Adobe in 2001. Before Fotiva, he was CFO and SVP and GM of Intuit's Small Business division. Co-founder Rene Lacerte is the son of Larry Lacerte who sold Lacerte Software to Intuit for $400M.

Investors: PayCycle raised a $8.5M series D in April 2005 led by DCM-Doll Capital Management with August Capital, Conning Capital Partners, Total Technology Ventures and Irwin Ventures. The company has raised $29.3M to date.

Business Model: The company sells a very inexpensive payroll platform - $10 each 3 months - that automatically calculates, files and pays payroll taxes. PayCycle currently claims upwards of 15K clients. A sign of progress is that PayCycle has been able to be certified in all 50 US states.

Competitors: ADP, Paychex, and Paymaxx.

Dirt: Lacerte might be able to top his old man's $400M take with this one. Low-end payroll has largely been ignored and incumbents like Paychex and ADP are a pain. The missing ingredient is marketing, but partners should be able to get PayCycle in front of people. Now that they have brought in a star CEO - stand-back.