Report: Zenefits raising mega funding round at up to $4 billion valuation

Zenefits, currently the fastest-growing software company in Silicon Valley and likely anywhere, is reportedly working on raising a monster round of funding.

According to TechCrunch, Zenefits is aiming to raise between $300 million and $500 million at a valuation of more than $3 billion. If the powerhouse institutional investors including hedge funds and pension funds get involved — and very likely they will — the valuation could go as high as $4 billion.

Zenefits declined to comment to TechCrunch.

At a $4 billion market cap, Zenefits, which launched just two years ago, would be in the top-20 highest-valued, VC-backed companies in the world, valued more than Jawbone and Stripe, according to data from Dow Jones and the Wall Street Journal.

The interest in Zenefits isn’t surprising, especially in the current funding scene, which has been dominated by mega rounds of more than $100 million. In the first quarter this year, six Silicon Valley tech companies raised mega rounds for a combined $2.3 billion.

After completing tech accelerator Y Combinator, Zenefits  raised about $84 million, including a rare double round last year led by Andreessen Horowitz.

San Francisco-based Zenefits is a program for human-resource professionals to manage and administer employee health benefits, payroll, 401(k) plans, stock options, maternity leave and vacation time. The basic version of the software is free, and Zenefits makes money by acting as the health insurance broker — facilitating the sale of insurance between health-care providers and employers while earning a healthy commission or broker fee.

The company’s growth rate has exceed even the most enthusiastic of investor expectations. At the end of last year, the company was more than doubling its revenue every 60 days, CEO Parker Conrad told the Mercury News. In 2014, revenue grew 20-fold over 2013. By the end of this year, Zenefits expects to be making $100 million in annual revenue, the company said earlier this year.

By the end of 2014, it had grown its employee count from 15 to 500, and that number is expected to quadruple by the end of this year. Zenefits opened an office in Arizona recently to hire 1,300 people.

The company has also sparked a bitter turf war with traditional insurance brokers, many of who see the company as the greatest threat to their paychecks since health care reform. So far, Zenefits appears to be winning that battle: After Utah Insurance Commissioner Todd Kiser last year called for Zenefits to shut down, Zenefits launched a full-on public battle with regulators. Just months later, Zenefits helped push through the state legislature that gave Zenefits the green light to operate in Utah.

Photo: Zenefits CEO Parker Conrad speaks at his office in San Francisco, Calif., Wednesday morning, Oct. 22, 2014. Conrad’s cloud software company has managed to change the health insurance industry even though it doesn’t sell health insurance. By Karl Mondon/Bay Area News Group.

 

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