How the HR Tech market is growing (analysis)

How the HR Tech market is growing (analysis)

The market for human resource management – HRM – is growing by an average of more than 12%. annually. Its estimated value, globally, will be more than $43 billion in 2028. The last 1.5 years of pandemonium have inflated the valuations of HRM startups. Analysts of the investment fund Market One Capital took a look at the most interesting entities.

The global pandemic crisis has changed the way people work. The HR sector has had to adapt in a short period of time to a new remote reality. This was followed by investments in companies offering digital platforms and tools to facilitate human resource management. According to a LaRocque report, nearly $5 billion will be invested in HR Tech solutions in 2020 alone. This year is likely to be even bigger.

– Investor interest has shifted from solutions that support talent acquisition to tools that improve remote work, work efficiency and overall employee wellbeing – explains Marcin Zabielski, Managing Partner at Market One Capital, a Venture Capital fund that makes early stage investments in European marketplaces and digital platforms.

Investors were most interested in solutions that support collaboration and creation, such as. Mural. The company was founded in 2011. and has not previously reached out for external funding. However, during the pandemic, it closed three funding rounds in a short period of time – one in 2019., second in 2020. and a third in 2021. – for a total amount of more than $190 million. This year, the funds leading the B round were Insight Partners and Tiger Global Management. According to TechCrunch, in 2020 Mural tripled its annual revenue (ARR) and had more than one million monthly active users (MAUs).

Another attractive investment area is tools that support the management of multiple applications from a single platform, increasing convenience and streamlining the work of users. Of note are: – for file management, – for synchronizing and updating files created in different channels that team members use, or Click.Up. The latter – similar to Asana – popular on the Polish market, acquired in December 2020. $100 million from Canadian company Georgian, reaching a valuation of $1 billion.

Concern for employee wellbeing has encouraged startups in the area to become more active, especially in the second half of last year. On the wave of this trend, Lyra Health gained unicorn status with a $110 million D round raised from Addition Capital. It now serves around 2 million users, double the previous year’s figure.

In terms of the pace of funding, an even more impressive example is Modern Health, which raised $74 million m in February 2021.In. from Founders Fund – less than 2 months after raising a $51 million round with Battery Ventures as the lead investor! In 2020, the startup tripled the number of employees and doubled its customer base to more than 220. Both of these startups offer comprehensive mental health solutions, providing employees with personalized treatment plans and access to therapists in a virtual space. Lyra is only available in the US, while Modern Health is already operating in more than 35 countries.

– It is clear that access to similar solutions translates into employee engagement rates and financial performance of companies – explains Marcin Zabielski. – The Polish company Mindgram, in which we invested in the second quarter of this year, has attracted tremendous interest from corporations that take employee mental health seriously. We are impressed by the dynamics of the development of this platform.

Investors are also interested in solutions that support the area of employee training and development. Skillshare or Coursera, are startups that in 2020. have raised financing ($66 million and $1.1 million, respectively).

– The current market situation shows that the challenges and problems faced by the HR sector a few months ago have become a signal for investors to support solutions that address specific user needs, and for entrepreneurs they have become a driving force for the creation of new more specialized solutions. In my opinion, this is just the beginning of a revolution in this sector – announces Market One Capital expert.

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