Retirement-focused fintech Guideline reaches $100 million in recurring revenue

Retirement plans like 401(k)s are considered some of the most sought-after workplace benefits in the U.S., and they’re even required of many employers in jurisdictions like California.

But for employers and employees alike, setting up plans and contributions has often been painful and confusing, says Kevin Busque, founder and CEO of retirement plan provider Guideline. 

Busque, who previously cofounded Taskrabbit, says he became interested in the 401(k) industry after being dissatisfied with the options available for his employees there. A provider available through Taskrabbit’s payroll company delivered dry presentations and a slew of paper forms to employees, many of whom simply never bothered to sign up. 

“I was thinking this is ripe for disruption just because of the low participation,” he says.

Guideline launched in 2016 with a goal of making 401(k)s easier to understand for employers, with no hidden fees or payments to third-party contractors like outside plan administrators or recordkeeping firms. “We make it really easy for them,” Busque says. “It’s turnkey—we own the entire software solution.”

For employees, who can easily manage their plans through Guideline’s website or app, the process is designed to be equally simple. Once workers add funds to their Guideline accounts, most choose to invest in one of the company’s managed portfolios, Busque says, though investors can also pick particular funds from a menu of options from Vanguard. 

Since its launch, Guideline has signed more than 47,000 businesses as customers, with nearly 1 million people having used its plans. And, the company announced Friday, it recently reached more than $100 million in annual recurring revenue.

Much of Guideline’s success comes from building essentially from scratch the entire software suite used to manage its plans, a rarity in an industry largely dominated by decades-old investment firms. The company also built integrations with major payroll providers like Gusto, Intuit QuickBooks, and ADP, making it easy to set up automatic deductions to fund plans.

“What got me excited is retirement is one of these areas that not much has changed in a couple hundred years,” says Aydin Senkut, founder and managing partner at venture capital firm Felicis, an investor in Guideline. “They basically approach it from, can this be a full-stack technology solution, and that’s not an easy thing to do.”

Building its own technology enabled Guideline to keep a simple fee structure and easily launch additional products, like the Starter 401(k) plans authorized by Congress in 2022, SEP IRAs for small businesses and self-employed workers, and IRA plans for personal retirement savings. This year, Busque says, the company plans to expand into health savings accounts, or HSAs, which let people save for medical expenses with pretax dollars. 

Still, managing the various types of accounts requires more than just understanding computer code, Busque says, noting that when Guideline launched its first seed round in 2016, its first new hire was a lawyer, “which our investors didn’t quite understand.”