Dive Brief:
- HR technology vendors represent a maze of solutions, products and services. They also represent an investment magnet, based on venture capital data from 2013 through 2016, according to Workforce.
- Workforce notes that venture capital funding and deal activity for HR technology firms in 2015 reached record highs, as HR tech firms landed $2.4 billion in 383 deals. That follows similar high rates of investment in 2013 and 2014 alike, Workforce reports.
- Workforce cites CB Insights, a venture capital and angel investment database, in reporting that within the first quarter of 2016 alone, HR technology firms had received about $600 million in venture capital across 106 deals.
Dive Insight:
Holger Mueller, principal analyst and vice president at Constellation Research, told Workforce: "Investing in HR tech is a strong model from a macroeconomic perspective." He cited trends including "the aging workforce, war for talent, breakdown of performance management strategies and the need to drive retention and productivity" as the prime factors driving HR technology as an "easy sell" for investors.
One important factor cited by Workforce is that the push to cloud-based technology gives even the smallest start-ups potential for enticing investors. It also notes that HR's growing appetite for cloud-based HR solutions is rising (although evidence on whether the cloud alone is an advantage has appeared to muddy to waters a little).
How strong is this venture capital trend? Even financially troubled Zenefits remains the most well-funded HR technology firm of the past five years, with $584 million in multiple funding rounds so far.
