Funding to recruiting tech startups like Gild, ClearFit, and Developer Auction fuels growth in seed/angel and Series A investments in the Human Capital Management Tech space.
Since Q1’12, technology-based recruiting products have received over $86 million in seed/angel and Series A fundings. This represents 61% of the $143 million in seed/angel and Series A fundings in the Human Capital Management Technology (HCM tech) space, over that time period. This early stage funding activity has been one of the biggest contributors to the recent deal growth in HCM tech, which covers all phases of an employee’s timeline.
The increasing popularity in recruiting tech comes as many businesses look to discontinue or scale back their training programs in order to save money. As a result, HR groups are increasingly looking for candidates that already have the skills needed for the job and don’t need training. The opportunity for recruiting tech comes from helping expedite and scale that search. Also, recruiting tech levels the playing field for small and mid-sized businesses that do not have the time and resources to conduct extensive recruiting or who do not want to pay expensive executive recruitment or placement firms. Examples of companies and some of the solutions that can be offered are below:
- Applicant screening and scoring (Gild, Bright)–A technology is used to analyze applicants’ technical skills (i.e. coding) and then scores them accordingly on ability. Employers can then easily compare the strengths/weaknesses of candidates.
- Applicant tracking and management (Workable)–Allows for posting to multiple job boards. A central online platform is used to help employers follow candidates on the different job boards and manage applicants’ resumes and bios.
- Applicant matching (ClearFit)–Once companies enter information about themselves and who they are looking for, a matchmaking algorithm is used to match a company with a candidate based on criterion like personality, experience, and motivations.
- Social recruiting (Work4)–Allows companies to reach candidates through social networks and mobile devices. These solutions are popular in helping companies with referrals and in finding passive job seekers.
Information about specific companies that were funded and what sub-verticals were targeted by investors can be found on the ‘Research’ tab, after logging in to CB Insights. (Note: These details are only available to paid subscribers.)
As shown below, recruiting tech companies account for 63% of all deals within HCM tech since 2012, totaling more than all other 3 sub-categories combined. Coming in second, in terms of the number of deals, were talent management products, followed by workforce management products and human resource management products, respectively.
In terms of funding, recruiting management saw over 250% more funding than talent management, the second largest sub-category within HCM tech by deals and dollars. While human resource management had five fewer deals than workforce management, the sub-category received nearly $4.5 million more in funding.