Feb 03 2022

HRTech market explodes with USD 14 Billion VC investments in 2021

“2021 proved to be an extraordinary year for HR Tech solution providers with around $14 B across 300+ deals in 8 categories. Not only was 2021 the best year ever for the HR Tech ecosystem, it showed that HR Tech will be key for Dgital Transformation”

by  Swechha Mohapatra, Head Consulting & Delivery, hrtech.sg

2021 proved to be an extraordinary year for HRTech solution providers with around $14 B across 300+  deals* in  8 categories. Not only was 2021 the best year ever for the HRTech ecosystem, it clearly showed that HR Technology is going to be the driving force behind  the digital transformation. 

Key Highlights of 2021:

  • Around 320 deals were tracked accruing to an investment of around US $14B 
  • 2021 saw a 775% increase in funding when compared to $1.6 B in 2020
  • Top categories of 2021: Talent Acquisition, Talent Engagement and HRMS
  • 28% of the total deals amounted to over 80% of the total amount raised
  • Top deals:
    1. Jobandtalent (Talent Acquisition, $728M)
    2. Deel (Talent Acquisition – Employer of Record, $581M)
    3. BetterUp (Talent Development, $425M)

In comparison, the highest deal in 2020 was by Eightfold AI for $125M. 

    • Maximum number of deals: Talent Acquisition 
    • Highest average deal size: HRMS 
    • Average funding size : $44 M (a 63% increase from $16.3M in 2020). See fig. 1.2 for average deal size by category.
    • Almost 70% of the total amount flowed into Series C to F start-ups, thereby indicating the focused interest of investors for mature and proven solutions. North America HRTech start-ups continue to draw top dollars, accounting for over 65% of the total fundraise globally. 
    • Meanwhile, APAC HRTech start-ups raised $1.46 B in the same period, including 23 India-based start-ups (such as Apna, Spottabl, BetterPlace, Monster.com, Refyne, Onsurity, Darwinbox, Senseforth.ai, Disprz, Nova Benefits) together raising $ 390.6 M.
    • With many HRTech solution providers getting added to the coveted unicorn club, 2021 saw 31 companies raising funds more than once in the year alone. This included India-based Apna.co ($182.5M), Teamflow ($499M) and highest rainmaker Jobandtalent ($728M), who raised funds thrice in 2021 alone. 
    • 51 deals were valued to be more than $100 M.
    • Papaya global, Deel, Jobandtalent, BetterUp, Lyra health, Personio entered the HRTech Unicorn list (apart from raising at least 2 deals of $100M each).

  • Notable deals across the 8 categories include :
    1. HRMS - Personio, Paycor Beisen, Payfit, Employment Hero, Darwinbox, BrioHR etc.
    2. Talent Acquisition
      • Employer of record: Deel, Papaya Global, Remote
      • DEIB recruitment platforms: GEM, The MOM project, Canvas
    3. Talent Analytics: Visier, Charthop, Eqtble, Panalyt
    4. Talent Development
      • Coaching & Skills platforms: BetterUp, GO1, Degreed, Multiverse, Coachhub, Disprz etc. 
    5. Talent Engagement
      • Health and Mental Wellness: Gympass, Lyra Health, Vida Health
      • Performance Management & OKR’s: Culture Amp, Hibob, Betterworks, Lattice, Ally.io 
    6. Talent Planning: Eightfold AI
    7. Talent Operations 
      • Workforce management Platforms: When I Work, Beamery
    8. Total Rewards
      • Employee Benefits platforms: Human Interest, Daily Pay
      • Compensation Management software: Salary.com, Syndio
      • Earned Wage Access platforms: Payflow 

 

The Top 10 Investment Funding deals in the space of HRTech

Incidentally, not only did the top 5 deals have had at least 2 rounds of funding in 2021 but also have gained unicorn status joining the growing list of HRTech start-ups. A roundup of these deals:

  1. JobandTalent (Series E $500M, Series D $120M, Series C $108M- Total $728M): Europe-based Jobandtalent, a workforce marketplace and a digital temping agency that uses AI to match workers to casual labor gigs in sectors like warehousing, e-commerce and logistics — closed a $500 million Series E round of funding pegging the start-up at a valuation of US$2.35 billion. Jobandtalent had also raised its Series D of US$120 million in March 2021 and $108 million in Series C in Jan 2021 to accelerate its expansion in key markets, including the U.S.
  2. Deel (Series D-$425M, Series C $156M, Total $581M): Deel, the remote hiring company shattering job barriers worldwide, raised over €366 million in Series D funding. This took  the total amount raised by Deel to over €543 million, and the company valuation at over €4.7 billion. Deel aims to eliminate remote hiring obstacles and creates an opportunity for all with a platform, tools, and flexibility built for teams to thrive whenever and wherever they want to work.
  3. BetterUp (Series E $300M, Series D $125M- Total $425M): BetterUp raised $300 million in Q4 in a Series E funding bringing the Executive Coaching & Mental health startup's valuation to nearly $5 billion. With this funding, BetterUp aims to fuel new product innovation to further democratize coaching and reach hundreds of thousands of individuals within an enterprise, no matter their position or level within the organization. The Silicon Valley start-up gained its place in the growing list of HRTech unicorns when it raised $125 Million in its Series D round at a valuation of $1.7 Billion. BetterUp also announced a pair of acquisitions in the emotional artificial intelligence and people management space: Motive and Impraise. 
  4. Personio ( Series E $270M,Series D $125M- Total $395.5M): A German start-up, Personio, which provides HRMS to small and medium-sized businesses (SME’s), raised $270.5 million in funding based on the strong demand for its services. With the Series E funding, Personio’s valuation jumped to $6.3 billion, making it one of the most valuable startups — HR or otherwise — currently in Europe. The company had raised its Series D round in Jan 2021 at a $1.7 billion valuation which means that it has grown 3.7x in a span of just 10 months. 
  5. Lyra Health (Series F $200M, Series  E $187M- Toal $387M): Highlighting the need for mental health tech, leading provider of mental health benefits Lyra Health, banked $200 million in new funding to raise its valuation to $4.6 billion with a total funding of $680 million till date. Lyra plans to accelerate its delivery of evidence-based mental health benefits for companies with employees located around the world. Lyra's new global mental health digital platform will provide members around the world with one place to access all of Lyra’s care options and services, such as preventive care, mental health coaching, therapy, and medication.

Other deals in the top 10 deals included Papaya Global ($350M), Workrise ($300M), Paycor ($270M), Beisen ($260M) and Human interest($255M).

APPENDIX 2021

Fig 1.1 - Category wise deals/ Size and amount

 

Fig. 1.2- Category wise Average/size and amount

 

Fig. 1.3- Region wise deals/Size and amount

 

Fig 1.4 - Series wise deals/size and amount

 

Note:

*As tracked by hrtech.sg research team via various sources

**As per industry analyst sources

Swechha Mohapatra (IHRP-CP, Associate CIPD) is Head of Consulting & Delivery at hrtech.sg and has more than 9 years of global experience in various Talent functions. She is a passionate HRTech evangelist, a member of IHRP HRTech CoP Taskforce, and an avid learner who is certified Six Sigma-Green Belt with a background of MBA (Specialization in HR and IT) and Master’s in Labor Laws and Labor Welfare. 

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