Zenefits, a year-old startup that makes human resources software, is valued at $500 million after its latest found of fundraising, according to people familiar with the matter.
The round, led by Andreessen Horowitz, generated $66.5 million to bring Zenefits’ total funding to $84 million. The valuation jumped from $45 million four months ago, when Zenefits attracted its previous investments, the people said.
The company could be one of the fastest-growing business-services software providers, with plans for revenue to increase 1,300 percent this year, San Francisco-based Zenefits said in a statement today.
Zenefits doesn’t need the money immediately but took the opportunity to raise it now, Chief Executive Officer Parker Conrad said in an interview.
“We had just a ton of interest from investors,” Conrad said. “We knew we were going to have to raise again at some point this year to fund growth in 2015. We thought, maybe we could raise today and do it on really good terms.”
Zenefits is one of several startups with expanding values. Pinterest Inc. recently raised $200 million in a financing that gave it a $5 billion valuation, up from $3.8 billion seven months earlier. Uber Technologies Inc. is in talks to raise funds that could value it at about $17 billion, compared with $3.5 billion last year. Others, including Dropbox Inc. and Airbnb Inc., have attracted investments boosting their values to $10 billion.
Zenefits automates human resources functions, from payroll to benefits, in a cloud-based application. The software is free, and Zenefits makes money when clients hire the company as their health insurance broker. It’s working with more than 2,000 companies, it said in the statement.
With 130 employees, up from 15 in December, Zenefits is almost too big for the office space it moved into five weeks ago, Conrad said. While negotiating for more room, the company plans to boost its sales and customer support teams and have more than 200 employees by the end of the year, he said.
“They’ve completely outperformed the business case that they presented, which doesn’t happen very often,” said Lars Dalgaard, a partner at Menlo Park, California-based Andreessen. He said its clients include “everything from steel mills to charter schools and even a circus.”
Among the round’s investors were Institutional Venture Partners, SV Angel, Hydrazine Capital, Elad Gil and actor Jared Leto. Bloomberg LP, the parent of Bloomberg News, is an investor in Andreessen Horowitz.