Finding, qualifying, and hiring talent is a tedious and painstaking process for both the recruiter and the recruited.
Yet the future of work depends on firms finding qualified candidates to fill positions. After all, the robots aren’t going to make themselves—at least for now.
So how much money are venture capitalists willing to invest in helping companies find the the right human for the job? As it turns out, quite a bit.
Recruiting Big Raises
It’s estimated that 29 percent of positions are filled by referrals. But that remaining 70 percent or so provides more than ample market space for venture capitalists to fund new companies made to help firms find new hires. The recruitment sector, pulled from Crunchbase data, includes apps and services that help companies find, screen, and manage job applicants.
In 2014, $291 million was invested in the sector, with approximately 44% of known funding rounds being made in the Seed stage. The largest recipient of funding was ZipRecruiter, which made up a fifth of 2014’s funding haul with its $63 million dollar Series A. Notably, this is the only round the “employment marketplace” has raised.
By 2016, funding into recruitment startups had made big strides, nearly tripling to approximately $863 million. And while Glassdoor, a recruiting website that also serves as a home for employees to review their employers, raised $40 million as part of its Series H, investors continued to show strong interest in Seed stage startups, which made up 42 percent of 2016’s funded cohort.
So what could explain the influx of funding?
Recruitment Software Becomes Friendlier
“Increasingly, businesses are looking for the software solutions they implement to align with their consumer expectations,” Bounds told Crunchbase News. “Compounding this push against the older systems is a modern employee that’s generally more tech savvy than the previous generation.”
Bounds’s observation appears to hold true as we look at funding rounds in the sector from 2017 to date. In May 2017, CornerJob raised a $19 million Series C, putting its total funding to $54 million. The startup offers a mobile recruitment app that is “as simple as a tweet.”
But will investor interest hold? According to Bounds, the waters are warm.
“Putting our product and traction together with the current state of the SaaS market made for a much more friendly environment than I’ve previously experienced,” explained Bounds. “I’d also add that early indicators are favoring that friendly environment to remain true through our next round.”
Yet there are other trends to explore in the recruitment space beyond SaaS and consumerized applications as we move through 2017.
Hired By A Bot
Like many other sectors, venture capitalists are fueling startups who integrate AI into their apps.
The main beneficiary of the AI movement in recruitment, in terms of funding, is Mya Systems. In May 2017, the company formerly known as FirstJobs raised $11.4 million for its AI-fueled bot. It claims to automate time-intensive tasks, such as screening and scheduling, with machine learning—reducing “time to hire” by 70 percent.
TextRecruit has also hopped on the AI bandwagon, although in a less overt way. The company, which raised $3 million as part of its Series A in March 2017, is an “intelligent messaging platform.” The company automates tasks such as sending out applications to potential employees, as well as scheduling interviews and screenings. Operating in the same space is Sqore, which raised $3.3 million to automate job screening.
And the AI trend in recruitment and the broader startup landscape is expected to continue, according to Bounds:
Looking slightly further over the horizon, I see AI — in combination with machine learning — helping to take the burden of hiring decisions away from humans in order to save them time, reduce bias, and improve overall employee performance.
Of course, automating every aspect of the recruitment process will remain convoluted for the foreseeable future. Every company has its own recruitment process, shaped by culture fit, work ethic, and degree of autonomy.
However, if you are a startup that can automate the most tedious tasks in the job recruiting process, VCs may recruit you.