Capitalist Note - This post is not sponsored in any way. When Andreessen Horowitz gives a cloud based HR startup I've never heard of 66 million, I'm compelled to be interested.
Inside baseball for sure, but noteworthy... From Re/Code a few weeks back:
"Zenefits, a year-old company that offers businesses a free method for filling out human resources paperwork in the cloud, has landed its second round of venture capital funding, a $66.5 million Series B led by Andreessen Horowitz with participation from Institutional Venture Partners.
Zenefits has now raised a combined $84 million since it launched 12 months ago. Andreessen Horowitz also led its first round."
If you were wondering whether the HR Tech sector is hot, I'd say it's hot. Andreessen Horowitz is led by Marc Andreessen, the founder of the old Netscape browser, which Microsoft killed with Internet Explorer before IE was subsequently killed by Google Chrome...Andreessen Horowitz is one of the leading venture firms in the world. And they're investing in a benefits firm that offers a free service. Hello.
More on Zenefits:
"Zenefits has created a cloud-based software platform that companies can use to automate the processes associated with hiring new employees, processes that more often than not are still done with paper forms: Benefits, tax forms, payrolls. “We allow companies to focus less on the process and more on people,” CEO Parker Conrad said.
It’s also free. Here’s how that part works: Zenefits acts as a middleman between its customers and the third-party providers of insurance and payroll and benefits services. “There are a lot of disconnected services for your 401k custodian and your health insurance carrier and the dental insurance carrier,” Conrad said. “But when you’re hiring a new employee, you need access to all of those things at once, and every time someone leaves you need to remove them from all those different systems, and every time there’s a change in their life you need to add that to all the different places.”
Zenefits makes money as an insurance broker. Every one of those new employees hired on by its customers brings in a commission from the insurance carriers. “We have relationships with practically everyone, and if we don’t, we can usually get it within a week,” Conrad said. “It’s like giving away candy to 7-year-olds.”
Oh yeah, remember Lars Dalgaard, that brash CEO of SuccessFactors? Dalgaard, a partner at Andreessen, did the deal. Zenefits is experiencing what he described as some of the fastest growth he’s ever seen. Dalgaard would seem to know a bit about potential, since he sold SuccessFactors to the German software giant SAP for about $3.4 billion.
Tech is hot, even in HR. If you're the HR leader of a small company with limited tech, it probably makes sense to spend some time digging into Zenefits...