SAN FRANCISCO, June 3 (Reuters) - Business startup Zenefits has raised another $66.5 million from investors, months after its first capital-raising, following a pattern set previously by a handful of hot, young consumer companies that proved their worth to investors over a short span.
Investors had valued Zenefits at $500 million before the new investment, a person familiar with the situation said on Tuesday after it had raised its second infusion of capital.
The rapid accumulation of early-stage funds puts Zenefits in the company of privileged start-ups that investors view as potential disruptors to existing businesses - and puts more pressure on it to deliver.
Zenefits, which handles human-relations tasks for small- and medium-sized businesses, draws comparisons to Workday, which does the same for larger companies.
Zenefits makes money by collecting fees from insurance companies when it refers its clients for insurance. Its core services are free.
But while Zenefits, founded just last year, has already raised a total of $84 million, Workday built up capital over time. Founded in 2005, Workday's first big funding round of $75 million did not come for four years; it held an initial public offering in 2012.
These days, many consumer companies are cutting that timeline considerably, in particular when it comes to the time between a first serious funding round, known as Series A, and the follow-on known as Series B.
A couple of years used to pass between those rounds, but that timetable is changing.
Technological advances such as cloud-based computing make it cheaper and easier to build a company. On top of that, the adoption of new services happens faster as mobile technology makes it easier to use the products and recommend them to others.
"We're just completely accelerating everything by a factor of 10," said Lars Dalgaard, a partner at Andreessen Horowitz, which led the latest funding round.
Consider the photo-sharing app Snapchat. When it raised its Series B last June, six months after its Series A, it already had 200 million users.
Other companies that recently raised Series B just months after Series A include Coinbase, the company trying to make virtual currency bitcoin more accessible to consumers; Hampton Creek, the food company; and Homejoy, the cleaning service.
Dalgaard believes the trend will accelerate for enterprise companies, particularly given they no longer need to justify cloud computing to customers.
The cloud technology that allows servers to operate remotely, and with more flexibility and efficiency - makes many of the new breed of enterprise companies possible, and drives their growth into unexpected business areas.
Other investors in the Zenefits funding round include IVP, which normally invests in companies at later stages of growth; SV Angel; and Hydrazine Capital. Academy Award-winning actor Jared Leto is also an investor.
(Reporting by Sarah McBride)