HR Tech News- August-September-2019

This month we are talking about HR Tech deals in August and September 2019. In these 2 months, we have seen approximately USD 470 million invested in this space. At a total of USD 800 million Q-3 of 2019 has been the slowest quarter this year. But when investors are not pumping money into HR Tech companies, it seems the HR tech companies get busy in consolidation. Please read on for more details.

The Favorites

Over these 2 months, we see the old favorites returning to the fore. Recruitment related technologies retain the top spot with 65% of the total funding. HRMS is a distant second with about 25% of the total funding. With 90% of total funding going in these 2 categories it indicates what happens when things slow down.

Checkr’s Series D of USD 160 million is one of the top 10 deals in 2019 so far. In the recruitment category, it is one of the biggest this year. As Forbes pointed out while reporting on this story, its growth and valuation seem to be fueled by the need for background verification, especially for gig-workers. The whole space within HR Tech is relooking at evolving solutions for gig-workers. In another smaller deal, Stoke, a vendor management platform for freelancers raised USD 4.5 million. These two news items are indicative of a larger trend that is coming to HR tech space around gig-workers. We expect to see more news on this as major HR tech players are likely to build/acquire these capabilities.

USD 82 million in Series E led by Sequoia Capital is great news for any tech company. This happened for CultureAmp and we are very excited about this news. Culture Amp has a unique value proposition as they combine employee engagement with performance management. (Achieved through the acquisition of Zugata). We are awaiting more details on how this money is used to create truly unique solutions.

Jobteaser, a French HR Tech company, raised USD 55 Million in Series C. The company is focused on graduate recruitment and career guidance. It claims to have a tie-up with 200+ European universities. The platform focuses on problems young adults face while entering the workforce and it’s a very interesting way of solving this problem. In continuation of the trend of niche funding, Nomad Health received USD 34 million. This company specifically focuses on healthcare jobs and focuses on placing nurses and doctors in freelance jobs. 

The India Story

Two Indian organizations, Darwinbox and Talview have also featured in the news in these 2 months. Darwinbox the HRMS has raised USD 15 million in Series B. Along with CultureAmp, this is another HR tech provider with the backing of Sequoia covered in news in these 2 months. This Indian HR tech company will use the funds to expand in South Asian markets while continuing to build its platform for newer capabilities like travel.

Talview, the instahiring platform raised USD 6.75 million in Series A. The company plans to enhance its offering in video interviewing by building additional AI capabilities using this fresh round.

If one looks at the funding rounds in Indian HR tech companies, we clearly see this market lacks the maturity of the North American or European market. Indian HR tech companies thus have a bright future as the market and VC environment matures over the years.

The Consolidation

Apart from these notable funding rounds, these 2 months saw some big acquisition announcements. What can be considered as one of the biggest consolidations in the HCM space, Alight Solutions announced acquisition of 50-year-old NGA HR.  As pointed out by Nelson Hall in their note on this acquisition, it’s a win-win for both organizations. In our opinion, this clearly indicates that enterprises are now looking for not just consulting but then implementation and post-implementation service delivery as an end-to-end offering. This will reduce handoff points and ensure enterprises get the maximum value from their HR tech investments.

In other significant acquisition news – Outmatch acquired Eureka Technology to add gamification and Natural language processing capabilities to its platform. Ceridian acquired Australian RITEQ to increase its presence in this APAC market. Entelo acquired ConveyIQ, in its quest to build an end-to-end solution from sourcing to hiring.

Conclusion

August and September have proven to be equally interesting months for HR tech as the rest of the year. Though the volume of USD invested in Q-3 has dropped by almost 50% as compared to Q-2, the overall activity in the space keeps the momentum. The key trends that we have seen this year continue to hold true. HR Tech entrepreneurs are focusing on innovation and specific industry verticals or candidate categories. They are increasingly using advanced technologies to fundamentally challenge the way we operate and work. We expect these macro trends to continue through 2019.