Platforms, not point solutions, can lead the way
The market for HR technology, which spans from workforce management to recruiting and applicant tracking systems, has proven remarkably resilient in the face of both pandemic and economic headwinds.
Some would even argue that it is precisely because of these headwinds that HR technology has captured and continues to attract the attention of investors. The pandemic spurred companies to invest in digital infrastructure as their workforces moved remotely, while macroeconomic fears increased pressure on HR teams – some of which faced layoffs in their ranks – to carefully screen candidates.
And investors clearly saw the opportunity. By 2021, venture capitalists funneled more than $12.3 billion into HR tech startups, about 3.6 times the amount invested in 2020, according to PitchBook data. That trend continued into 2022, with mega deals that saw more than $1.4 billion invested in the industry in the first two months alone.
“HR tech startups will need to demonstrate a clear return on investment not only by impacting revenue growth, but also efficiency.” Allison Baum Gates, General Partner, SemperVirens VC
In early January, Paris-based software developer Payfit closed a $287 million Series E, bringing total funding to nearly half a billion. That same month, Darwinbox, which provides an HR technology platform for recruiting and virtual onboarding, made $72 million at a valuation of more than $1 billion. The list of successes goes on: Remote raised $300 million in April; SeekOut raised $115 million in January; and Personio picked up $200 million in June.