Well that was fast.
It was a little more than four months ago that Zenefits raised a $15 million Series A Round from Andreessen Horowitz to power explosive growth in its cloud-based HR platform. But the company has already gone back for more funding, raising an additional $66.5 million from return investor Andreessen Horowitz, along with Institutional Venture Partners.
Zenefits was founded on the idea of simplifying the process of HR for companies, by providing a simple, beautiful UI for personnel departments as well as the rank and file, making it significantly easier to keep track of their pay and benefits. The SaaS platform itself is free to use, but Zenefits makes money by acting as an insurance broker.
That led to venture firms lining up to invest. According to co-founder and CEO Parker Conrad, it was a “competitive” fundraising process, with Andreessen Horowitz deciding to double down on the company after leading the Series A. He declined to comment on the valuation, but we’ve heard that the company was valued at $500 million pre-money.
The new financing brings total amount raised to $84 million since being founded. Other investors include SV Angel, Hydrazine Capital, Elad Gil, and Jared Leto.
“We saw an opportunity to raise all the money we thought we would need for 2015 today,” Conrad said. “We were just really fortunate to have investors that have a lot of conviction in us.”
That investment came after the company had grown at least 30 percent month-over-month since early 2013. It’s now working with more than 2,000 small and medium-sized businesses, in turn serving more than 50,000 of their employees.
When asked why Andreessen Horowitz decided to put more money into the company, general partner Lars Dalgaard said it was because Zenefits had grown well beyond its own pretty aggressive forecasts.
“The company had significantly outperformed all the business metrics than they presented,” Dalgaard said. “We’ve never seen growth like this before.”
That’s saying a lot, considering Dalgaard is the former CEO of Successfactors and led that company to $364 million in revenue and a $3.5 billion acquisition by SAP in 2011. But he believes that the next generation of cloud-based enterprise companies could be even bigger, and that Zenefits could lead that charge.
Andreessen’s investment was also based in part on the fact that Zenefits had shown that it could grow beyond just serving the tech-heavy California market. While getting nearby startups to sign up was fairly easy, it also showed that there was a large appetite for the platform in a wide range of SMBs.
Just three months ago, 96 percent of the company’s users were tech companies, but now they make up less than half of its entire customer base. In that time, 60 percent of new clients come from outside California, and 60 percent are non-tech companies.
To meet the demands of that customer base, the company has also increased its headcount from 15 to 120 employees since the beginning of the year. With a huge SMB market ahead and lots of cash in the bank, Zenefits is poised to continue its rapid expansion.