2020 Global HRTech Investments & Start-up Funding

2020 has been a tough year. Organizations that have survived and thrived through the unfathomable effects of this pandemic have one thing in common: they are flexible, adaptive, and most importantly technology-driven. It has truly been the year of Data & AI penetrating almost all sectors of the workforce. Companies are redesigning their workforce and structure rapidly by leveraging technology. And truly, HRTech seems to be at an inflection point, riding on the back of deep work tech transformation. While traditionally HR teams have struggled to get budgets, 2020 saw a sudden surge in interest by companies of all sizes to leverage technology to support their remote HR teams, as companies were focused on increasing productivity with lower operating costs. We expect this trend to continue through 2021.

HRTech is transforming & revolutionizing the structure, process & functioning of not only the HR organization in particular but the entire enterprise as a whole. 

1. An era of virtual, distributed, and hybrid workforce (comprising full-time, part-time, freelancers, and gig workers among others) is necessitating a fully-functional Human Resource Management System (HRMS) platform for enterprises of all sizes to ensure seamless HR Service Delivery. 
2. The virtual working regime has also challenged our traditional notions of skills development, thereby further widening the skills gap that needs to be bridged on a war footing.
3. "Work from Anywhere Anytime" has also blurred the line between work and life, thereby accentuating the increased focus on employee well-being (and more specifically mental wellness).

Looking at the above aspects and simultaneously reviewing the deals in close quarters, we strongly foresee that Talent Engagement (including Employee Wellness), Talent Development, and HRMS to become trending categories over the next 2-3 years.

We tracked over 100 deals valued at $1.6+ bn across 7 HRTech categories: 

1. Talent Analytics
2. HRMS
3. Talent Acquisition 
4. Talent Development 
5. Talent Engagement 
6. Talent Operations 
7. Total Rewards 

Key Insights:

1. Talent Engagement" product providers continue to attract top dollars: There is a growing importance on employee experience and hence enterprises are embarking on employee experience design and looking for products that help create a consumer-grade user experience for their employees. We expect this strong momentum to continue well into 2021 and beyond.
2. Talent Acquisition continues to garner attention & dollars: Total number of deals in Talent Acquisition was higher than Talent Engagement, though the average deal size in the segment of the former was lower than that of the latter. 
3. Diversity & Inclusion, Video Assessments & Conversational Chatbots are some key areas of investment within the "Talent Acquisition" segment.
4. In related research of 2020 HRTech M&A deals, we see a strong consolidation happening with the TA segment which accounted for 57% of the total deals tracked.
5. Talent Engagement is currently the most trending category. With the unexpected and sudden shift to remote work regimes, organizations are now finally focusing on the correlation between talent engagement and productivity 

2021 is going to be an exciting year in the HRTech space. 

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