This month we are talking about HR Tech deals in October and November 2019. In these 2 months, we have seen approximately USD 130 million invested in this space. These two months have been one of the mute periods as far as the volume of activity is concerned. These 2 months have seen a lower number of $ investment announced while the pace of consolidation within HR Tech has been similar throughout the year, including these 2 months. Please read on for more details.
The Big And The Small
October and November 2019 mark a sharp drop in total $ invested in a month in 2019 within HR Tech. Both months saw close to $65 Million investment announcements, this is a new low for 2019, lower than the $86 Million we saw in August 2019. This is a sharp drop from $ 385 Million worth of deals that we noticed in September 2019. Does this indicate a lull before the storm? Or does this indicate declining interest in HR Tech space? Or this is a necessary breather in the long run? We believe it is a bit of everything. However, we continue to remain bullish on this space and believe the potential for this space to continue to grow and expand is as high as ever.
We love the story of Papaya Global primarily because when we first met this co-founder, she was pregnant with her human baby and this HR tech venture. 3 years later, we are happy to see her first 2 babies grow while she has decided to give birth to another human baby. The story of Papaya Global and its recent round of USD 45 million funding is inspiring at multiple levels. Firstly, its an HR professional with 10+ years of professional experience identifying a need at work and then deciding to solve it herself. Secondly, it’s an entrepreneur committed to the cause of irrespective of her situation. The platform aims to solve a very complex problem of global payroll with simplicity and last-mile connectivity as 2 key ingredients. Tel Aviv is fast emerging as another key source of innovative HR tech startups, and we are happy that a country that has given us many technology companies are also coming of age in HR Tech.
When someone invests 60% more money into an HR Tech company which received USD 15 Million in April you believe the company is on a fast growth trajectory. When that company is Lattice which raised USD 25 million from Tiger Global in October, you feel happier. Mainly because you like what Lattice does and the purpose for which it exists – making work more meaningful. Secondly, you admire an organization that has 1400+ customers on its performance and engagement platform and has just 100 odd employees. Lattice seems to be practicing what they preach. We love such technology companies who eat their food.
Israel was in news again with Centrical announcing USD 13 million in funding to gamify microlearning and performance management. The company has a very novel offering combining learning, feedback, and gamification with deep IT integrations. This is a unique offering in the market which helps large organizations motivate employees, especially field forces to meet their targets. Its no wonder that Centrical is already used by large technology, FMCG, Insurance and Banking organizations.
The Acquisitions
HR Tech space has been witnessing consolidation and acquisition across categories and geographies. These 2 months are no exception to that. Though the $ investments have hit a new low, the pace of consolidation is consistent with earlier months in 2019. So if HR Tech companies are not raising the money they are looking for a suitable home to move into.
TMP Worldwide announced 2 acquisitions in 15 days in October. This makes 3 acquisitions by this global talent acquisition technology leader in 2019. Earlier in October, they announced the acquisition of a Netherlands based recruitment marketing tech firm, Maximum. In few days TMP Worldwide announced its acquiring UK based Social media leader Carve to amplify its social media marketing capabilities. When we put these 2 deals together, it’s very clear that TMP Worldwide is looking to expand its reach in Europe while building multiple talent marketing capabilities.
Big fish eat small fish when it’s hungry. We were reminded of this when Kronos announced the acquisition of Optimum Solutions. The big fish eats the small fish because it serves a particular purpose for its dietary needs. In this case, Optimum solutions customers in manufacturing, healthcare, and retail seem to be the major draw for Kronos. As the market gets competitive, players with focused niche solutions for specific industries will see increasing interest by larger players.
Bullhorn acquired Erecruit to strengthen its offering and appeal to the staffing and recruitment industry. Staffing companies are the new battleground for talent acquisition technology. Nearly 70% of staffing firms are now looking to adopt end-to-end staffing technology solutions to help streamline operations and improve productivity. As the battle heats up, consolidation is a natural phenomenon. It would be interesting to see how all components of the staffing puzzle come together to solve the business challenges.
Pageup’s acquisition of Dublin based recruitment marketing software, Clinch is an interesting deal. Primarily because PageUp is from down under and we have a huge fascination for HR Tech companies from APAC going global. The other reason for our excitement is this acquisition not only adds capabilities to the PageUP solution but it also gives them access to the European market. With this acquisition, PageUp is now a very interesting player in the HR Tech space focusing on Talent Acquisition and Talent Development space. We see a lot of headroom for these 2 spaces to work together to create unique solutions for the global markets.
Conclusion
October and November have not been the most exciting months for HR Tech primarily because there is no big splash. But these months continue to indicate the overall trends of consolidation and market expansions. The sharp drop in the volume of $ investment worries at one level but we remain optimistic that it will pick up in December 2019 and beyond. We have seen USD 14.6 Billion invested in HR Tech space in 11 months so far. The above is coupled with close to 30 mergers and acquisitions and tons of partnership deals. We will soon be looking back in 2019 and looking forward to 2020. Let us know what you are hoping for HR Tech to unfold in 2020. Till then happy holidays.
