According to CB Insights, HR Tech deals reached a record high in 2016 with $1.96B invested across 350 deals from January to October. And, no surprise, most of those deals were in talent acquisition technology. Compare that to 2012 (with only $400M of investment in HR technology) and it becomes clear that this market is not slowing down anytime soon.
In fact, it really began to heat up this month. Every day seems to be marked by a new round of investment for some of the leading startups in this space. Not to mention the other major announcements – CareerBuilder got acquired and all eyes are on Google. It is an exciting time to be in talent acquisition technology.
Below are some of the major announcements this month:
• Entelo: Entelo is a leader in the talent acquisition technology market and has become a critical part of any forward-thinking recruitment or sourcing strategy. What makes it standout is not only a stellar product (inbound and outbound recruitment) but also, its approach to employees, partners, and customers. Last week, it announced $20M in Series C funding led by U.S. Venture Partners.
• Yello: One of the more impressive companies I have met with this year, Yello has a product suite that includes a CRM, scheduling, video interviewing, events management, campus recruiting, and employee referrals. This week they raised $31M in Series C funding from JMI Equity.
• Textio: The augmented writing platform helps companies create more effective job postings. Textio claims to predict the performance of these postings by analyzing the outcomes of 10 million postings each month. This week, it announced $20M in Series B funding led by Scale Venture Partners.
• Workey: This AI recruitment solution is helping companies reduce or replace their cost on third-party recruitment companies. Earlier this month, it announced $8M in Series A funding led by PICO Partners.
What’s driving this focus on talent acquisition technology? Why are investors watching this market so closely and what does it mean for you? A few factors to consider:
• Business Pressure: Talent acquisition is elevated to more of a business priority. Companies are making more strategic decisions around where they spend their dollars and what value they are seeing from these solutions.
• Importance of the Ecosystem: The modern talent acquisition landscape is comprised of three core systems (recruitment marketing, ATS, and onboarding) and an ecosystem of providers that integrate with those systems. This ecosystem is helping to drive change and improve talent acquisition efforts and this is where most of the investment is happening.
• Focus on the Candidate: For over 70% of companies, the candidate experience is the top priority. Traditional recruitment providers are not designed to enhance the candidate experience. Startups and third-party providers are leading in this area.
One important question that customers must ask is “Where does this investment go?” Customers need to consider if these providers are going to develop the product, enhance sales and marketing, or strengthen customer support. Ideally, they would do all three but it can be hard to tell. It is important to ask your providers tough questions about their investments and partner with them as they grow over the next year.