Zenefits raises $15M to put the sexy ‘back’ into HR, payroll, and insurance

No one likes to deal with “administrative crap.” Zenefits is hard at work automating this metaphorical excrement out of existence.

The startup announced today that it has raised $15 million to fuel product development, sales and marketing, and continue capturing business away from legacy human resources information system (HRIS) providers.

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Zenefits aims to make taking care of benefits, payroll, and HR easier to deal with for both employers and employees. Cofounder Parker Conrad was inspired to start Zenefits based on his experience at his previous startup, SigFig (which is still around).

“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.”

HR has been dominated for years by mountains of paperwork, spreadsheets, and complicated IT systems that require employees to manage them.

Zenefits connects to a company’s existing HR and payroll systems and guides employees through the process of hiring paperwork, signing up for payroll, figuring out taxes and deductions, enrolling in benefit and insurance plans, tracking paid time off, and tying up loose ends when they leave the company.

Zenefits digitizes all of this information and keeps it in one place. Employees have access to their own account, so they can make changes when necessary, and the system generates automated reports.

“Most HRIS systems are static; they aren’t connected to anything else. So when you update information in one place, it doesn’t update in others,” Conrad said. “If you move or get married, that has to be changed with HR, payroll, medical insurance, life insurance, etc. It is a huge administrative headache that requires a full-time staff. With us, it all happens automatically.”

This means that a business needs fewer HR and back-office employees, and those it does have can focus on more important tasks.

Zenefits’ software is free. It makes money primarily as an insurance broker. The startup said it has doubled the number of employees enrolled on its platform every six weeks since early 2013, a 60 percent month-over-month growth rate. It now works with over 500 companies and manages 5,000-plus employees.

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“This is the great hack in our business model,” Conrad said. “Insurance brokers make way too much money for the value they provide. We say switch to us and we will do way more for you than other insurance brokers will do. About 50 percent of our customers are moving to us as their broker. We can get them set up in 30 minutes; it is a no brainer.”

Zenefits’ HRIS platform is now available nationwide. Its main competition are HR services like BambooHR, SilkRoad, and Workday.

New investor Andreessen Horowitz and existing investors Maverick, and Venrock contributed to this round of funding, bringing Zenefits’ total capital raised to $17.1 million.

Zenefits is participated in Y Combinator’s Winter 2013 class and is based in San Francisco.

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