It Is a Good Time to Be in HR Technology

Last week was a big week with some major announcements about investment in HCM. First, Workday announced a $250 million venture fund with investments to go into early and growth stage providers focused on topics such as AI, blockchain, and machine learning. This announcement not only demonstrates Workday’s growing leadership in all things HCM but it also enables startups to develop better products and expand their customer base. Less obvious announcements from last week include Gartner’s decision to sell its talent assessment business (through the acquisition of CEB – which acquired SHL) to private equity firm, Exponent, for $400 million. Not to mention, investment raised by Joveo ($5 million), gr8people ($8 million), and ZipRecruiter ($50 million). Investors recognize the opportunity and the demand for better solutions to attract, engage, and retain talent. And, it is a good time to be in HR Technology.

Here are some of the areas where we see the most investment:

–          Recruitment Marketing: Interest in the recruitment marketing space has not died down. Investors recognize that recruiting is evolving the same way marketing evolved several years ago. They are looking at solutions that offer one platform for engaging, nurturing, and connecting with talent before they ever apply for a job. Research we did last year found that 1 in 3 companies are increasing their spend on solutions that handle everything before someone applies for a job.

–          AI: The topic of AI is pervasive in HCM. Yet, most companies are still confused by what AI is and how it can be used to solve talent management challenges. Companies are curious about the value of AI and what use cases they should consider. But with so many providers entering this space, it is challenging to know who to consider. Hopefully, some of the investment in AI will help to provide clarity around AI and differentiate some of these providers.

–          Blockchain: The topic of blockchain is everywhere and not just because of the buzz around Bitcoin. Essentially, blockchain is a database that is not stored in just one central location but is everywhere- making the data easier to maintain. Sourcecon published a great article recently, where it explains Blockchain in this way:  “Imagine a Google or Excel sheet you’ve shared with your recruiting team to track hiring activities. Your sheet updates automatically in real time, it’s asynchronous, and everyone has access to the ability to update it.”

–          Employee Recognition: At one time, an area where investors seemed to tread lightly, the employee recognition market has really taken off. Investors recognize that employee recognition is the key driver of employee engagement and are looking at solutions that enable social recognition, feedback, and peer-to-peer interaction.

We will continue to watch the investment in this space are we are excited for the opportunity it presents providers and practitioners. Our friend, George LaRocque, does an exceptional job of covering the investment in this space. We also recommend checking out his research and publications on this market.