Zenefits, a fast-growing software-as-a-service startup, announced on Tuesday that it had raised $500 million in a round led by Fidelity Management and TPG at a $4.5 billion valuation. 

Zenefits plans to use the fresh capital to hire even more employees to support its growth. CEO Parker Conrad said in a statement that: “If we want to hit equally eye-popping numbers in 2016 and 2017, we really need this much capital to do it.”

The Silicon Valley, Calif.-based startup, which allows small and medium-sized businesses to manage human resources services in a much simpler way, has been identified as one of the fastest growing Software-as-a-service companies in tech history. The company is growing fast. It has more than 10,000 small and medium-sized businesses using its service. To continue its hyper growth, the company must spend aggressively on sales and technical support to bring even more customers on board.

Zenefits offers human relations management service to small and medium sized businesses. Unlike most software companies (which charge customers a subscription fee for using their software), Zenefits gives its human resource software for free. It generate its revenue by acting as an middle man or brokerage, taking commission when it connects companies with third party vendors like heath insurance provider or payroll service provider.

Fidelity Management and private equity firm TPG led the funding round, with participation from Founders Fund, Khosla Ventures, Insight Venture Partners, and Ahston Kutcher\’s investment firm. Existing investors Andreessen Horowitz, Institutional Venture Partners, and actor Jared Leto also participated in the funding round. 

Founded by Parker Conrad, Zenefits offers free software-as-a-service (SaaS) for human resources functions like payroll services, benefits and vacation tracking to companies with less than 1000 employees. The company was part of the Winter 2013 batch of startup accelerator Y Combinator. 

Image Credit: BreakOutList

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