Grazzy wants to stop letting people use ‘no cash’ as an excuse to avoid tipping

Carrying cash used to be a thing, but now with credit cards, and more recently digital wallets, having more than a couple of dollars in your physical wallet is hard to come by.

Unfortunately, that also leaves many of us ill prepared to show gratitude, especially when traveling, to give a cash tip to the people cleaning our rooms or bringing your car around.

Austin-based Grazzy wants to change that through its instant pay and tax compliance platform where people can leave tips for frontline workers that employees can access on the same day. It also provides a recruitment and retention tool for service-based employers, like hotels, bars, restaurants and salons, while also giving employees financial wellness tools.

Russell Lemmer, Grazzy’s founder and CEO, told TechCrunch he was one of those travelers who experiences great services at hotels but uses his phone for everything and rarely carries cash.

“While staying in Las Vegas, I left my bags with the valet, and wanted to tip, but couldn’t,” Lemmer recalls. “I heard the valet tell his colleagues that ‘this is seven in a row.’ I felt ashamed and started to think about a solution.”

In surveying others, Lemmer found that he was not alone: A majority of people he talked to were also heavy phone wallet users who were once in a position of not being able to tip because they didn’t have cash.

He started working on Grazzy in September 2021, and what resulted is an app that takes a “business-to-business approach to Venmo,” and a seamless way to show gratitude to someone they don’t know personally, he said.

Lemmer also wanted to help employers reduce hourly worker turnover, which he said is a $100 billion problem in the U.S., by providing a way for employees to earn and save more. He’s not alone: As the global pandemic exasperated the already tough conditions for frontline workers, other startups brought in technology to solve certain aspects. For example, Anthill to connect those who never sit at desks, SnapShift to handle HR and AskNicely for customer experience.

Here’s how Grazzy works: Guests can instantly tip staff using a property-branded QR code, and the Grazzy Direct feature allows staff to access their tips instantly. Grazzy makes money from the processing fees.

The platform also monitors and tracks the money so that businesses can be tax compliant while also seeing the wage increases and the effect on their employees.

Lemmer says Grazzy reduces the wait that often happens with tips coming through credit card transactions and the need to regularly tip out or cut weekly paychecks. In addition, by offering an alternative to traditional cash, Lemmer sees digital tips increasing an employee’s earnings by 20% on average.

Grazzy started working with its first large hotel customer last July and that has now grown to about a dozen. It is still in its early stage and started bringing in revenue in the last month, Lemmer said.

Today the company announced $4.25 million in seed funding led by Next Coast Ventures and Tuesday Capital. This brings its total funding to date to $6.8 million.

Lemmer intends to deploy the new capital into accelerating customer growth across additional hotel brands, operating groups, restaurant groups and salons and into technology development so that Grazzy integrates with major operating systems.

In the meantime, he has a three-year plan in the works that involves going after hotel operating groups that manage hundreds of properties and building out additional financial wellness features for workers.

“We want to start to layer in better ways to save and spend,” Lemmer said. “We feel that is the next step after helping them make more money and access more of it on the same day. Long-term, they stay in these jobs a little bit longer, and it is a recruiting tool for the employers.”