In a tight labor market, so-called vertical labor markets that zoom in on one sector, such as nursing or catering, attract financing. For example, Trusted Health, a healthcare workforce platform, raised $149 million in November. Seasoned, a restaurant employee recruitment platform, closed at nearly $19 million at about the same time.
Investors are similarly betting there is a lot of gain in a recruiting platform focused entirely on the burgeoning cannabis industry, which has already employed an estimated 320,000 people since last fall, a 32% increase from the previous year.
Indeed, an investor syndicate led by Level One Fund has just put $19 million in Series B funding into Vangst, a six-year-old Denver-based outfit that combines both short-term and full-time workers with job opportunities at cannabis companies around the U.S. surprise, given the traction the outfit is seeing along with the variety of revenue streams it has built up.
According to founder and CEO Karson Humiston — who launched the company while a student at St. Lawrence University — Vangst currently has 500 “gigs” a week that the platform takes an average of 48 hours to fill. (Vangst treats these individuals as W-2 employees and pays them through its own payroll.) It also now boasts nearly 2,000 full-time positions representing $85 million in gross salaries.
It can add up financially. Catch charges its customers 50% more than it pays its part-time employees, so if it pays $15 per hour, it can charge a customer $22.50 for that employee’s time. As for full-time positions, in exchange for vetting the talent it connects to businesses, Vangst takes a percentage of each candidate’s freshman salary.
Vangst also charges employers on both monthly and annual subscriptions for the privilege of posting as many job openings as they need and, more recently, began building a content company with modules on retail and other functions in the cannabis industry that are new to the industry. industry may not understand. (Not everyone knows what a trimmer does.)
It hasn’t all been a bed of rosettes for Humiston and her team. While Vangst had gained momentum after his Series A round, which closed with $10 million in 2019, it, like many other rental companies, was hit hard by the immediate ripple effects of the coronavirus. In March 2020, Humiston says, Vangst was forced to lay off half of his then 70-strong team as his clients cut their own payrolls and began operating at 50% of their previous capacity.
In fact, it was because of Vangst’s dwindling revenues that it decided to place full-time salaried candidates into positions. Think of accounting managers, product managers and software engineers. “That was kind of our Covid strategy,” she says.
Gradually, as business revived, Vangst had built a brand new business book, Humiston says.
Now the challenge is no longer supply but demand. Like almost every other employer in the US, Vangst, with 56 employees, works hard to find people to fill the functions on its platform, including by attending trade shows and spending money on SEO services.
Part of his new funding round will be used to build his small marketing team, unsurprisingly.
Vangst’s own customers meanwhile have to relax their conditions in many cases to get help. As Humiston puts it, “We encourage them to pay above minimum wage” and to “demonstrate their mission and values and the benefits they provide.”
The good news: Lots more new jobs are expected to come online to fill, which should be good for Vangst as the job market gets back on track.
New York State, for example, legalized recreational cannabis use last September, and while it is still in the process of handing out retail licenses, that decision is expected to create 60,000 new jobs, according to former New York Governor Andrew Cuomo.
Last fall, New Jersey also signed three bills that allow and regulate recreational marijuana use, and companies are already opening up there.
That doesn’t say anything about Michigan, which is currently “extremely growing” as a market, Humiston says. (Vangst also has customers in Colorado, California, Nevada, and Arizona, among others, who have already embraced recreational marijuana. There are currently a total of 18 states where it’s legal.)
Eventually, Humiston says, Vangst hopes to go international as well. To that end, it plans to spend time in Barcelona with one of its investors, Casa Verde Capital, which is now investing more money in European startups.
The team has to master a lot first, she offers. “Like here [in the U.S.], where we had to learn a lot about business needs and regulatory matters, we are eager to learn about international markets. We will start that exploration process this spring.”