HR Tech News – June 2019

10 deals and a total of USD 764 million invested in various HR technology deals, the month of June maintains the steady pace of activities. This month we see 3 deals with more than USD 100 million invested in Wellness, Benefits and Talent management domain within HR tech space. The total invested in Q-2-2019 is around USD 1.2 Billion which is marginally higher than Q-1-2019.

SoftBank Going Hard at HRTech

When 2 of the 3 deals in USD 100 million plus category go to Softbank we know its no coincidence. Softbank vision fund is a mammoth USD 100 billion fund with investments ranging from Uber, Paytm, Nvidia and Wework among many others.

They invested USD 300 million in Brazil’s Gympass. The concept behind Gympass is simple, promote fitness in corporate employees by enabling companies to pay for such programs through the monthly pass. With companies increasing focus on wellness beyond benefits, such offerings are likely to make business sense. Fitato and Fitternity are similar platforms in the Indian market which are giving the flexibility of workouts to people. Such platforms can then enable corporates to add this to their benefit programs. Individuals and organizations are coming together to ensure we live a healthier life and reduce our healthcare costs.

The second investment Softbank participated in the month of June is in adjacent space but does not find a mention on their official page. The investment of USD 205 million in Collective health which allows companies to pay for healthcare costs directly is kind of downstream investment after Gympass. Essentially Softbank will win if you exercise or if you fall sick. Healthcare benefits are a big part of the employee benefits offered globally. These solutions are maturing faster especially in high-cost markets like the USA. We feel similar solutions have a play in markets like India as the cost of healthcare steadily rises. Managing health care benefits and being able to control costs while offering health insights to employees is critical to most corporations today.

Talent Management

Coaching and leadership development have been around for a while. The cost of providing these services to employees have typically prevented companies from making it available for a wider population. Betterup raised USD 103 million in series C with an aim to change this. It’s in a unique position as there aren’t much technology-driven behavior changes and coaching platforms. We primarily like Betterup offering because a) it democratizes the coaching offering b) It gives control over the coaching sessions to where it belongs, to the employee and c) it enables scalability through its global reach for the coaches themselves. We see a huge potential for them to deploy this funding for global growth and tighter integration with other performance management and talent development platforms.

When your goal is to make sure no one becomes obsolete in their career over time, you need money. The company on this mission, Degreed raised USD 75 million this month.  Their focus on measuring and building skills is a great niche in the talent management space. With companies world over re-imagining their businesses, skill development has become a hot topic in the C-suite conversations. Companies are looking at innovative ways of training and re-training their employees. Degreed is in a great position to build and strengthen its position in this market with this new infusion of capital.

An interesting offering in this space is coming from Pyron. They have raised USD 20 million this month to help automate enterprise workload with AI. Most organizations today have a variety of software products primarily built to automate their workflows and processes. These have a huge amount of data but little insights. They are also not connected to each other. And then there are new age technologies like ML and AI that offer huge potential. Companies like Pyron aim to sit between and provide access to contextual information to employees helping them improve their productivity. This is a powerful narrative and we are very keenly observing how is this shaping up globally.

Talent Acquisition

This is one category which refuses to stay out of news even for a month. This month we have Allyo raising USD 45 million.  With a clear focus on using AI to improve candidate matching for recruitment, Allyo is focusing on a specific area within the talent acquisition space. Finding the right talent for the requirement from all the noise is critical for most recruiters and organizations today. Google Hire is an interesting offering in similar space which comes with the legendary google search capabilities. Candidate matching is an evolving space and almost all ATS players are seen investing here.

If you are one of the world’s leading recruitment process outsourcing (RPO) provider what are the chances you are investing in building your engineering capabilities? We say very high. The trend where consulting services are now bundled around or with a technology platform is almost commonplace. In one of the recent deals in this direction, we are very happy to see Alexander Mann acquire Karen HR. The press release says it’s a strategic move to accelerate the launch of new digital tools. RPO providers world over thus have a choice now to either develop their own tools or partner with existing ATS and other technology solution providers to build a better experience for their customers. We reckon like everything else some will make while some will buy while some will make and buy too.

Conclusion

The month of June does not bring any new surprises and that is a piece of good and disappointing news at the same time. It is good because it brings predictability to space and it is somewhat disappointing for the very same reason.

We see trends from last year continuing. Investments in Talent Acquisition, Talent Management, and Wellness continue across geographies. The use of AI/ML in various applications especially in talent acquisition intensifying.

With half of 2019 behind us and more than USD 2.2 Billion invested in HR technology, we are well on our way to celebrate a great 2019. We have been part of the HR technology space for more than a decade and we believe there was never a better time than now to be a part of this exciting space and shape the journey.