Deals

VCs gave Zenefits $66.5M — because even they don't want to deal with HR paperwork

Zenefits screenshots
Image Credit: Zenefits

As we’ve said before, HR may not be super sexy, but it sure is catching investors’ eyes.

Today, payroll and benefits software company Zenefits announced that it has raised $66.5 million as a second round of institutional funding. This round is coming in only a few months after its first round in January and less than a year and a half after its launch.

Zenefits makes cloud-based software that takes care of companies’ payroll and other HR administrative tasks. Cofounder Parker Conrad started Zenefits after realizing how much of a hassle the old way of managing these things was while at his previous startup SigFig.

“We had no HR person, and so all the admin crap floated to the top,” Conrad said to Venturebeat. “I ended up having to deal with it, which I deeply resented. I would much rather do something else. I went through a list of things I hated dealing with at that last job, and Zenefits is now building features one by one so other people won’t have to.”

While there are certainly other companies out there that are also working to make annoying HR paperwork a thing of the past, Zenefits quick growth is notable. The company raised $15 million only a few months ago, and has since grown its team from 15 to 120 employees, and tech companies now represent only half of its 2,000 customers, in contrast to comprising 96 percent three months ago.

“Zenefits is well on its way to 1,300 percent growth for the year, which is some of the fastest growth we’ve ever seen. With Zenefits, no startup entrepreneur or human resources head and their team should ever have to spend mind-numbing hours on tedious administrative HR paperwork again, allowing them all more time to lead” said Andreessen Horowitz general partner Lars Dalgaard, who led this round.

“This was the hottest deal in Silicon Valley five months ago, and it still is today.”

Moreover, it’s attracted the attention of Institutional Venture Partners (IVP) among others, a venture capital firm traditionally focused on later stage investments.

“Zenefits is scaling faster than any software company that we’ve ever seen,” said IVP general partner Jules Maltz.

“As a later-stage investor, it’s rare for us to participate in large Series B rounds. We’ve only done this a few times for exceptional companies including Dropbox and Snapchat.Zenefits is on a similar trajectory, and we’re thrilled to help them disrupt the HR software market,” added Maltz.

The company said it will use the new funds to continue building out its technology, as well as to expand its team as it continues to grow.

Andreessen Horowitz led this round, with additional participation from IVP, SV Angel, former Twitter and Google executive Elad Gil, and actor Jared Leto.

Zenefits was founded in January 2013 by Conrad and Laks Srini, and is located in San Francisco. This new round of funding is bringing the company’s total funding to date to $83.6 million.