Comcast Ventures, the corporate venturing arm of cable and internet service provider Comcast, took part in the $500m series C round closed by US-based human relations automation service Zenefits last month, managing director Dave Zilberman has confirmed to Global Corporate Venturing.
Zenefits raised the series C funding at a $4.5bn valuation at the start of May, and although Comcast Ventures was not included in the officially disclosed list of investors, which included Fidelity Management and Research Company, TPG, Insight Venture Partners, Founders Fund, Khosla Ventures, Sound Ventures, Andreessen Horowitz and Institutional Venture Partners, Zilberman said Comcast did participate.
“We are interested in the broader small and medium-sized business category as a whole – how small businesses embrace enterprise software solutions, which is a luxury that large corporations have, and small companies really have not had an opportunity to take advantage of,” Zilberman said.
“We felt Zenefits provided a very unique value proposition to those businesses because they have built out an awesome HR platform that is really the hub for small businesses to manage their organisations. It is very much about the hub and a number of spokes that can come off it.”
The round represented one of the more recent signs that the enterprise software sector is continuing to make big strides when it comes to venture capital support.
Workplace communications app developer Slack raised $160m in April at a $2.8bn valuation, the month after IT infrastructure platform Simplivity secured $175m in its series D round, and Zilberman stated that enterprise software startups were continuing to raise cash because of a combination of a broader understanding of the requirements of small businesses and a software-as-a-service (SaaS) business model that makes their products economically viable, but also because smaller businesses still need to increase efficiency.
“There is a critical need in the category, which is well understood,” Zilberman said. “In the United States alone there are something like 20 million small business-sized organisations, there is just a massive number of companies that need productivity solutions, revenue generating products and churn reduction solutions.”
Zilberman oversees Comcast Ventures’ enterprise software investments, and it has been very active in the sector, funding startups including cybersecurity company Bay Dynamics, in which Comcast invested $8m in July 2014 and which Zilberman said is already profitable, and sales communications platform ClearSlide, which like several of the unit’s portfolio companies, also serves its parent company’s small business group.
“The other angle for us, from a broader Comcast perspective, is that Comcast has a very significant small business services group,” Zilberman explained. “This is the part of the business that serves the business customer, not the residential customer and that is a really substantial part of Comcast’s core business.
“From our purview as investors that are closely aligned with Comcast’s core, we have a lot of visibility in that small business market and the services that resonate with those small businesses.
“We see a lot of alignment between Zenefits and the small business market that Comcast serves. We provide broadband services predominantly to small business customers, and those customers are also the ones who need these kinds of products, whether it be Zenefits or DocuSign.”
Digital transaction technology provider DocuSign raised $45m itself last week in a round that did not include Comcast, but which boosted its series F round from $233m to $278m and its overall funding to more than $500m. Comcast first invested in DocuSign in 2012 and helps to promote the company’s technology to its small business customers.
“DocuSign, we invested in three years ago or so and that was just about SaaS business productivity and improving customer efficiency, and that in the end was brought about by SaaS and business model innovation, and the broadband network increasing in reliability and latency.
“We have millions of small business customers and these customers are a significant percentage of the customers for DocuSign as well, so it is a very healthy, mutually beneficial relationship in that regard, and we think that Zenefits could do very well with that as well.”
– Photo of Dave Zilberman courtesy of Comcast Ventures