Zenefits — the Silicon Valley startup that promised to overhaul the world of benefits management with its package of free, cloud-based HR tools — appears to have fallen on hard times.
The Wall Street Journal reports that the company’s chief investors are losing confidence in its ability to meet the ambitious revenue goals it set. Given that it had only brought in $45 million in August, its $100 million target for the year looks like a long shot.
As a result, only several months after estimating Zenefits’ value at $4.5 billion, Fidelity Investments, a mutual fund that has provided much of Zenefits startup capital, downgraded its assessed value of the company by nearly 50 percent, to roughly $2.34 billion.
As a result, sources tell the Journal the firm has frozen hiring and cut pay. A number of top executives have either left or been fired.
Although Zenefits’ core services are free, it makes money when companies use it to buy health insurance.