After recent large acquisitions by SAP, Oracle, and IBM, rapid deal activity is picking up in Human Capital Management Tech (HCM Tech).
Technology solutions aimed at Human Resources departments fall into an area called Human Capital Management Technology (HCM tech). Over the past two years, HCM tech has seen 119 deals resulting in over 78% deal growth. With salaries and benefits as one of the top three expense line items in most organizations, there has been a push to improve talent acquisition, training, and measurement capabilities. Increasingly, these functions are being aided and driven by technology.
HCM tech covers all phases of an employee’s timeline and interactions within an organization, such as:
- 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?
Even with the success of the IPOs of Workday and WageWorks, the recent billion dollar acquisitions of SuccessFactors (SAP), Taleo (Oracle), and Kenexa (IBM), and an uptick in deal activity, the total amount of money raised over the past two years has actually fallen by over 20% to $319 million.
Details on the most active investors in the HCM tech space can be found on the ‘Research’ tab, after logging in to CB Insights. (Note: The list of most active investors is only available to paid subscribers.)
It appears as if the funding from Q3’12-Q2’13 could not keep pace with the large amount of funding seen from Q4’11-Q2’12. As expected during those three quarters (Q4’11-Q2’12), a minority of the deals accounted for a majority of the money raised including $85 million in Series F funding to Workday, $35 million in growth equity to iCIMS, $35 million in Series C funding to SilkRoad, $25 million in Series C funding to Badgeville, and $21 million in Series B funding to Identified.
More recent funding examples include $16 million in Series B funding to payroll solution company, CloudPay, $13.6 million in private equity funding to recruiting software company, Bullhorn, $15 million in Series B funding to workforce analytics company, Visier, and $20 million in growth equity to time tracking company, Replicon.
Over the past five years, the 42 deals seen in Q1’13 was the high watermark. This increase was largely driven by investments at the seed/angel and Series A stages, which represent over 72% of deals. Specifically, there has been 91% growth in seed/angel transactions and over 122% growth for Series A transactions.