Seattle-area startup TipHaus landed $3.5 million in new funding to streamline how businesses pool and distribute tips to employees.
Launched in 2018, TipHaus sells software to hospitality companies to help managers reduce errors related to tip distribution.
The company links with point-of-sale systems to combine tips, classify them, and allocate them to the relevant staff member. It charges a monthly price of $99 per location.
The startup launched a banking tool in September that lets enterprise customers digitally distribute tips to their employees the same day those tips are received.
Tipping is gaining wider acceptance in various types of establishments including places like Subway, CEO and co-founder Leif Magnuson told GeekWire. The pandemic helped drive more consumers to tip service workers, and the amount that people tip has increased over the past several decades, CNBC reported.
The pandemic also hurt TipHaus when restaurants shut down. The founders were on the brink of calling it quits.
But the company survived and is now in more than 2,000 locations across the country. Customers include Austin, Texas-based based Kerbey Lane Cafe, Honolulu-based Tikis, and Seattle-based Ivar’s. TipHaus is testing its technology with several large enterprise customers, such as stadiums and theme parks.
Magnuson said the company is unprofitable but said it is a so-called “default alive” venture, meaning it’s on track to make a profit without requiring additional resources.
TipHaus competes with POS giant Toast, which offers a tip pooling and allocation function, and well-funded startups like Kickfin and 7Shifts.
Magnuson founded the company after discovering that tip distribution was a common pain point among restaurant managers. Prior to launching the business, he was the director of supply chain at Seattle-based eZip Labs.
The company’s other leaders include co-founders Taylor Birkeland, vice president of engineering, and Mac Gainor, chief technology officer, in addition to Kirk Grogan, chief operating officer.
The majority of the round was led by Seattle-based early-stage venture firm Fuse. Other participants include Sugar Mountain and Bill Moore, the former CEO of headphone-maker Human. In May, TipHaus raised $1.1 million in a pre-seed round from SeaChange Fund.
