With Workday trading near historic highs and strategics including SAP and Oracle pursuing $1B+ acquisitions in the human capital management tech (HCM tech) industry, venture capital is flowing into startups offering technologies and platforms aimed at Human Resources departments.
The influx of financing to HCM tech startups also comes at a time when employers ranging from tech startups to the Fortune 500 are placing an increasingly high priority on finding and retaining top talent.
HCM tech companies in this brief cover all phases of an employee’s timeline and interactions within an organization and range from:
- Recruiting management – How do we identify, attract, screen, and track the best talent as quickly as possible?
- Talent management – Once applicants are hired, how do we onboard, train, teach, and retain our talent?
- Human resource management (HRMS/HRIS) – How do we manage payroll, compensation, and benefits? How can we utilize self-service solutions to give employees 24/7 access to their information?
- Workforce management – How do we help our employees set and attain performance goals? How do we manage employee scheduling, time tracking, and attendance? How do we use technology to aid in workforce planning and analytics?
HCM Tech Financing Trend
In 2013, HCM tech startups took nearly $600M across 208 deals, both five year highs. On a year-over-year basis, HCM tech funding increased 21% while deal levels jumped a whopping 96%.
HCM Tech By Company Stage
Spurring the jump in HCM tech deals has been venture capital activity at the early-stage. In our earlier research, we found that Internet and mobile HCM tech deals saw the largest industry level jump in YoY seed deals and dollars. Among the notable HCM tech investors at the early-stage is Andreessen Horowitz, which hired former SuccessFactors CEO Lars Dalgaard last May. A16Z’s early-stage HCM tech investments include online benefits and payroll platform Zenefits and employee onboarding startup Simpler. Over the past eight quarters, over 3/4ths of all deals in the HCM tech came at the Seed or Series A stages.
HCM Tech By Geography
Over the past eight quarters, Silicon Valley has taken 1/5 of deals in the HCM tech space. New York has seen a significant jump in venture deals to early-stage HCM tech startups such as Jibe and Namely. Interestingly, over 1/2 of all deal activity in the HCM tech space came outside of major U.S. tech hubs including some of the more notable late-stage firms in the space including Sequoia-backed HireVue and SilkRoad Technology, backed by investors including Foundation Capital and Intel Capital.
A list of the most active HCM tech investors and largest financings in 2013 can be found on the ‘Research’ tab, after logging in to CB Insights. Note: This research is only available to paid subscribers with access to CB Insider. For more data on the HCM tech industry, also check out Human Capital Management Tech Analyst.
This report was created with data from CB Insights’ emerging technology insights platform, which offers clarity into emerging tech and new business strategies through tools like:
- Earnings Transcripts Search Engine & Analytics to get an information edge on competitors’ and incumbents’ strategies
- Patent Analytics to see where innovation is happening next
- Company Mosaic Scores to evaluate startup health, based on our National Science Foundation-backed algorithm
- Business Relationships to quickly see a company’s competitors, partners, and more
- Market Sizing Tools to visualize market growth and spot the next big opportunity