Venture capital firms don’t typically lead follow-on rounds for existing portfolio companies — particularly at increased valuations — let alone after such a short lag. So what happened?

“They’ve completely surpassed our expectations on growth,” explains Lars Dalgaard, an Andreessen Horowitz partner and Zenefits board member. “It is on a rate to have 1003% growth, and has more than 30% growth every single month. I’ve never seen anything that comes close to it in the cloud space. In fact, it looks like it could be the fastest-growing SaaS company ever. So why wouldn’t we want to own more of it?”

Dalgaard declined to give specific revenue figures, or to confirm the $500 million valuation (sources say that the company originally was seeking just $50 million, so the ultimate valuation may have been even higher). He did say, however, that Zenefits solicited term sheets from outside investors in order to set a pricing baseline. In the end, Andreessen Horowitz was joined on the deal by Institutional Venture Partners, SV Angel, Hydrazine Capital, Elad Gil (ex-Twitter and Google) and actor Jared Leto.

The Zenefits platform connects to a wide range of third-party systems in areas like health insurance, payroll and 401(k) management. Unlike most SMBs, however, it does not charge its end users. Instead, it acts like a broker, charging those third-party provides on a commission basis.

Zenefits didn’t really need new money yet, but followed a number of other recent startups that have opted to strike while the iron was hot. “They’ve already out-executed what a normal company does by its Series B round, so they already see some of the growth opportunities of a company at that stage,” Dalgaard says. “So why not raise it now?”

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