Unleash Your Market Knowledge Despite a global pandemic raging, high unemployment, and economic uncertainty global investors doubled down on HR technology VC in 2020, including Q4.
USD $1.28 billion in Q4 2020 global HR tech venture capital investment. Clear signs of pandemic impact on investor calculus.
USD $5 billion in calendar year 2020 global HR tech investment. Second highest annual total in the last decade, despite the pandemic.
Several product categories were favored by investors. Eleven mega-rounds were announced in 2020.
HR tech VC volume unchanged by pandemic
Regardless of the raging global pandemic and its economic impact, and in some cases because of it, global investors doubled down on HR technology in 2020. In fact at USD $4.98 billion 2020 generated the second-highest amount of growth capital to flood into the market in the last decade.
Global HR tech VC in Q3 2020 saw $1.65B invested, which left most thinking there would be a bit of a hangover in Q4. However, it really resulted in more of a shift in focus.
Investors tap breaks on recruiting tech
The breakdown of HR technology venture capital across categories in 2020 showed clear signs of impact from the global pandemic and resulting changes to work. HCM and talent acquisition normally attract similar dollar volumes quarterly. However, in 2020 HCM saw nearly triple the dollars invested in talent acquisition tech. More than half of the HR technology investment, $2.6 billion, was in HCM.
A different calculus
An employer’s ability to lead, manage, communicate, collaborate, and work with a distributed or remote workforce was stress-tested in 2020. Also tested was an employer’s ability to listen to its workforce and respond with both agility and compassion. This led HR and investors to look for new models in collaboration and communication tech. Learning has been reinvented every few years for the last two decades. This is where employees’ consumer-grade expectations meet work. Both Chief Learning Officers (CLO) and tech providers have struggled to keep up with fast-changing tech and user demands. This accelerated the latest wave of disruption in learning tech. People everywhere buckled under the pressure of social movements and the call for justice simultaneously with the impact and stressors associated with the pandemic. Factors like financial wellness, mental wellness, conflict at work, and more put wellness on the top of the CEO’s priority list for possibly the first time ever. With the CHRO, CLO, and CEO all looking in these directions, so goes the venture capital.
A global market
Since January 2017 more than 65% of the global HR technology VC tracked by WorkTech was invested in U.S.-based startups. While the lion’s share is, as expected, invested in Silicon Valley, HR tech has always had emerging startups in all of the U.S. major markets. Startups and entrepreneurs tend to locate themselves near the commerce centers for the industries they support. In a broad sense, Silicon Valley is the commerce center for all of tech, however, HR tech aligns with services and providers in financials, staffing, benefits brokerages, and myriad other industries. These industries are broadly dispersed. In HR tech the existence of firms outside of Silicon Valley is more representative of this long-standing influence, not of a movement or “exodus” from SV.
A little fine print: Deals are tracked via public sources. Currency is converted to US dollars at the time of the announcement, using then-current rates. WorkTech studies the HR technology market, but they are not financial analysts. None of the observations or predictions should be considered financial advice. We do our best to track all deals, but encourage you to share any details on deals that were missed.