Analyzing the HR Tech Investment Landscape

2016 - A data-driven look at financing trends, investors, and hot markets within the human capital management ecosystem
About Techcelerate Ventures

Tech Investment and Growth Advisory for Series A in the UK, operating in £150k to £5m investment market, working with #SaaS #FinTech #HealthTech #MarketPlaces and #PropTech companies.
HR Tech funded company Deal startup cbinsights
2016 - A data-driven look at financing trends, investors, and hot markets within the human capital management ecosystem
About Techcelerate Ventures

Tech Investment and Growth Advisory for Series A in the UK, operating in £150k to £5m investment market, working with #SaaS #FinTech #HealthTech #MarketPlaces and #PropTech companies.
HR Tech funded company Deal startup cbinsights
Analyzing the HR Tech Investment 
Landscape
A data-driven look at financing trends, investors, 
and hot markets within the human capital 
management ecosystem
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A unique combination of data science and machine learning 
to help you see what's next.
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Table of Contents
Funding and Deals
HR Tech Roars Back as Deal Activity Ties All-Time High                                                   5
HR Tech Startups See Over 60% Funding Growth in 2015                                              8
Zenefits vs the Competition                                                                                                   14
HR Tech Landscape and Investors
125 Startups Transforming Human Resources                                                                 18 
Across Recruiting, Benefits, Payroll, and More    
10 Early-Stage HR Tech Startups                                                                                           32
The Most Active VCs in HR Tech and their                                                                          34
Investments in One Infographic
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Funding and Deals
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HR tech investment hit record annual levels in 2015 with $2.4B raised across 383 deals. 
However, funding and deals slipped in the second half of that year after a peak quarter 
in Q2'15.
Now, HR tech has bounced back, with Q1'16 equaling Q2'15 for deal count, while still 
falling behind in terms of the funding tally ($591M in Q1'16 to $1.1B for Q2'15).
Using CB Insights data and analytics, we dig into funding trends, most well-funded 
companies, and active VC investors in HR tech (aka human capital management), a 
category which includes tech-enabled management of human resources, staffing, 
recruiting, and employee benefits.
April 11, 2016
HR Tech Roars Back As Deal Activity Ties 
All-Time High
HR tech funding recovered in Q1'16 after tapering off in 
the second half of 2015. 500 Startups and NEA are the most 
active VC investors to date.
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Deals and dollars
In Q1'16, HR tech saw roughly $600M invested across 106 deals. The quarter tied the all-
time high in deal count reached in Q2'15 while also reaching the second-highest total 
tally in funding.
The most recent quarter saw several large deals to HR tech startups. On-demand hiring 
startup SnagAJob raised an $100M Series E, recruitment marketplace Hired raised a $40M 
Series C, and background-screening platform Checkr raised a $40M Series B.
Most well-funded companies
Troubled insurance and payroll startup Zenefits is the most well-funded HR tech company 
in 2016 (the company was in the news early in 2016 after its CEO Parker Conrad resigned 
following irregularities in how the company complied with regulations). Despite its 
setbacks, Zenefits has raised a massive amount of money, as we analyzed in a brief 
comparing its funding figures to those of its competitors.
The top 3 list is rounded out by less well-known HR tech companies like OneSource 
Virtual (a Texas-based provider of HR solutions built on the Workday platform) and China's 
FXiaoKe.
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Most active investors
In March 2016, we highlighted the most active HR tech VC investors, with a tie in the first 
spot between 500 Startups and Andreessen Horowitz.
Since then, 500 Startups has emerged as the most active HR tech VC with its recent bet 
on Thailand-based GetLinks. NEA and Andreessen Horowitz are also active VC investors in 
HR tech and are now tied in the second spot.
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HR tech is a hot category, with both funding and deal activity leaping to new highs in 
2015. However, when taking a closer look, $100M+ mega-rounds to Zenefits, OneSource 
Virtual, and FXiaoKe took a large portion of total funding in the year, making up roughly 
30% of investment in HR tech in 2015.
Funding growth aside, deal volume also increased significantly in 2015 reaching close to 
400 deals, when 2014 had ended at under 300 deals.
Using CB Insights data and analytics, we dig into funding trends, most well-funded 
companies, and active VC investors in HR tech (aka human capital management), which 
includes tech-enabled management of human resources, staffing, recruiting, and 
employee benefits.
March 8, 2016
Software Eats The Back Office: HR Tech 
Startups See Over 60% Funding Growth In 
2015
Deals also leapt in the year. Rounds to Zenefits, OneSource 
Virtual, and FXiaoKe accounted for a big chunk of funding. 
a16z and 500 Startups are the most active investors in HR 
tech.
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Deals and dollars
Total funding to the space in 2015 hit $2.4B across 383 deals representing 62% growth 
in funding over the total in 2014. When comparing 2015 to 2011, funding totals grew 8x 
in the period, climbing 707%. Despite impressive growth, 2015 funding was buoyed by 
three deals that together represented $750M in investment, or 30% of total funding for 
the year. Those deals were the $500M Series C to Zenefits, the $150M Growth Equity round 
to OneSource Virtual, and the $100M Series D to China-based employee management 
platform, FXiaoKe.
Deal volume increased through 2015 with 383 HR tech deals completed compared to 296 
deals in 2014, representing 29% growth in activity
Quarterly trends
The quarterly trends echo the annual growth seen in the previous chart, but also reveal a 
drop-off in funding toward the end of 2015. After reaching an all-time high of $1.18B in 
funding in Q2'15, quarterly funding totals declined to just under $400M in Q4'15.
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Deal volume remained strong in Q4'15 at 91 deals, with the last 6 quarters all reaching 
80+ deals to HR tech companies.
Deal and dollar share
HR tech deal share skews towards the early-stage (seed/Series A) deals with 3 of the last 4 
quarters seeing these stages account for at least 65% of deal share. Mid-stage accounted 
for 9% to 19% of deals over the past five years while late-stage deal share made up 
between 6% to 10% of HR tech deal share.
There was an increase in deals classified as "Other" in 2015, which includes convertible 
note funding and minority investments by corporations who are increasingly active 
investors in the startup scene generally.
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In terms of dollar share, funding doesn't weigh as heavily toward the early-stage.
Mid-stage took the bulk of dollar share in 2015 accounting for 44% of dollars to the space, 
and made up between 20% and 41% in the four prior years. Early-stage dollar share still 
represented a significant portion of HR tech dollar share, taking between 20% and 31% of 
dollars in the five-year period. Late-stage deals accounted for up to 44% of dollar share, 
a peak reached in 2013, but dropped to 29% in 2015.
Most well-funded company
Perhaps the most well-known HR tech company in this analysis is Zenefits (the company 
was in the news early in 2016 after its CEO Parker Conrad resigned following irregularities 
in how the company complied with regulations). Zenefits raised a $500M mega-round 
led by Fidelity in May 2015, and has raised over $580M to date. The top 3 list is rounded 
out by less well-known HR tech companies like the aforementioned OneSource Virtual (a 
Texas-based provider of HR solutions built on the Workday platform) and FXiaoKe. Check 
out the top 10 list ranked by total disclosed funding on the next page.
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Top VC investors
Andreessen Horowitz tied 500 Startups as the the most active HR tech VC investor over 
the past 5 years. A majority of Andreessen's deals are happening at the early-stage, and 
it's worth noting their largest investment position is in HR tech company Zenefits. NEA is 
also an active VC investor in HR tech, rounding out the the third spot.
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Top early-stage investors
Andreessen Horowitz was also the most active early-stage VC investor with recent 
investments in HR analytics company Reflektive and recruitment software Jopwell. 500 
Startups was the second most active early-stage VC investor, with the number 3 spot tied 
between NEA and East Ventures.
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Zenefits' raised a gargantuan $500M financing round in May 2015 which valued the 
company at $4.5B. Described as the fastest-growing SaaS (software-as-a-service) company 
of all time, the company's fortunes turned after a series of regulatory issues came to light 
which ultimately resulted in the company's CEO, Parker Conrad, stepping down. One of 
the issues as reported by William Alden of Buzzfeed was that that the company had built 
software to help brokers cheat on licensing requirements.
Subsequent reporting by Julie Bort and Eugene Kim at Business Insider painted a picture 
of a company that spiraled out of control and that resulted in bans on drinking alcohol 
and having sex at the office. It was a PR nightmare that could bury most startups.
But Zenefits had raised a funding warchest which may help them weather this storm. To 
put their funding in perspective, we compared the total funding of Zenefits to seven of 
its VC-backed competitors using CB Insights data on company comparables.
Specifically, we compared Zenefits funding figures to Gusto, Justworks, Lumity, 
EaseCentral, Maxwell Health (which raised a $22M Series C March 21, 2016), Flock, and 
Namely. These companies compete with Zenefits either by brokering health insurance 
via HR and payroll software channels or helping insurance brokers modernize their 
operations.
March 20, 2016
Zenefits vs The Competition: Will The 
Funding Gap Help Them Weather The 
Storm?
Zenefits has raised $217M more in total funding when 
compared to the aggregate funding of its competitors. Will 
the sizable funding advantage help them get through their 
current woes?
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Zenefits vs the competition
Outside of the enormous $500M Series C Zenefits raised in May 2015, they raised roughly 
$84M across their Seed, Series A, and Series B rounds. In comparison, competitors like 
Gusto, Justworks, Lumity, EaseCentral, Maxwell Health, Flock and Namely in aggregate 
have raised roughly $367M to date.
To put the total funding comparison in perspective, we breakout the individual funding 
figures of Zenefits and its seven competitors.
Arguably Zenefits' largest competitor is HR insurance and payroll software startup Gusto 
(formerly ZenPayroll) which has raised $136M to date. Other competing companies to 
raise large amounts of funding include New York-based Namely, which has raised roughly 
$103M since 2012. Both companies account for the bulk of funding raised by Zenefits' 
competitors, however the total funding figure still comes nowhere near Zenefits' total as 
can be seen on the next page.
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HR Tech Landscape 
and Investors
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HR tech startups have seen considerable momentum, raising $2.4B in 2015. With funding 
and deal count reaching all-time highs, we decided to dig into HR tech on a more granular 
level. Startups in the HR tech space are addressing pain points like staffing, recruiting, 
employee benefits, and much more.
We used CB Insights data to identify 115 private companies in HR tech as well as 10 
exited investor-backed companies bringing the market map's total to 125 companies. We 
mapped them according to the eight main categories in which they're operating. The 125 
HR tech startups included are addressing productivity, recruiting tools, freelancer and 
contractor hiring, perks, job search, operations, payroll, and insurance.
March 29, 2016
125 Startups Transforming Human 
Resources Across Recruiting, Benefits, 
Payroll, And More
From unicorns like Gusto and Zenefits, to early-stage startups 
improving employee productivity and recruiting, HR tech is a 
hot category.
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The breakdown is as follows:
 
Recruiting Tools: This was the largest category in the market map. It includes company-
information service GlassDoor as well as Hireology. This section includes Applicant 
Tracking as a sub category and counts Greenhouse Software in the section, among 
several others.   
 
Recruiting Marketplaces & Job Search Platform: Companies in this category include 
short-term job matching marketplace Jobbatical and job search engine Simply Hired. 
These startups are making it easier to find, post, and search for employment, among 
other things.
 
Recruiting: Contractors/Freelancers: Startups in this category are addressing on 
demand workers and part-time freelancers. Examples include HourlyNerd, which 
connects small- and mid-sized businesses to part-time consultants as well as HR 
software company, PeopleMatter.
 Operations Management: HR outsourcing software OneSource Virtual is one of the 
more well-funded companies in the category, having raised $165M in funding to date. 
Companies here are addressing payroll, benefits, and other services.
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 HR Insurance/Benefits: Companies here are either brokering health insurance via 
HR and payroll software channels or helping insurance brokers modernize their 
operations. The category includes Gusto and Namely, which have raised $136M and 
$103M in funding to date, respectively.
 
Employee Perks: Startups here include employee reward software Bonusly, which 
counts FirstMark Capital and Bloomberg Beta as investors. This is the smallest category 
in the market map.
 
Culture & Productivity: Companies here measure, quantify, and improve employee 
culture and productivity through technology. The category includes company culture 
startup CultureIQ as well as Culture Amp, which uses analytics to provide insights on 
employee engagement and company culture.
 
Select HR Tech Exits: Notable exits in HR tech include Workday and job-search site 
Indeed, which exited for $4.4B and $1.4B, respectively. 
See the full company list on the following pages.
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Funding to HR tech startups exploded in 2015, hitting $2.4B across 383 deals. Tech 
companies are addressing various pain points within HR, including issues like diversity 
(Jopwell), connecting talent to jobs on-demand (JobToday), talent sourcing (Lytmus), 
and more.
We used the CB Insights Mosaic algorithm, which provides predictive analytics on the 
health of private companies, to assess early-stage startups in the space (Series A or seed/
angel companies). The list of companies below have raised financing in Q4'15 or 2016 
year-to-date, have less than $11M in total funding, and show other positive metrics, 
including jobs listings data or recent news mentions, among other signals parsed by 
Mosaic. 
Among the high-momentum startups on our list is Phenom People, which applies CRM 
tech to hiring and has raised roughly $11M to date, making it the most well-funded 
company on our list. The already-mentioned mobile HR app JobToday (which tries 
to connect candidates with retail/restaurant jobs within 24 hours) along with pre-
employment testing service Criteria Corp round out the list's top 3.
The list ranks the startups by total disclosed funding. Bloomberg Beta and Accel Partners 
are each investors in 2 of the 10 companies on our list. Check out the list on the following 
page.
March 14, 2016
From Pre-Employment Testing To On-
Demand Jobs: 10 Early-Stage HR Tech 
Startups
Bloomberg Beta and Accel Partners are each investors in 2 of 
the companies on our list. All the companies have raised in 
the last 6 months.
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HR tech investment is booming. In 2015, HR tech saw $2.4B in funding across 383 deals.
Outside of the $100M+ mega-rounds to companies including OneSource Virtual, and 
FXiaoKe there have been a flurry of investments into startups addressing pain points 
ranging from staffing, recruiting, to employee benefits and more.
Which firms are most active? We used CB Insights data to rank VCs by their unique HR 
tech investments over the past 5 years. 
Andreessen Horowitz and 500 Startups top the list as the most active investors in HR tech 
startups. Both firms are now not only the most active VC investors in HR tech but also 
were among the most active early-stage VCs overall in 2015. Some other takeaways from 
our infographic:
 
In the past year, Andreessen Horowitz has made various early-stage HR tech bets 
including investments in HR analytics company Reflektive and recruitment software 
Jopwell. Additionally, they have placed a big bet (reportedly their largest single 
investment) on Zenefits. Andreessen Horowitz participated in a $500M mega-round 
to Zenefits in May 2015.
 
500 Startups is tied in first place as the most active HR tech investor since 2011. They 
have recently placed bets in office management software Service Partner ONE and HR 
management platform Allay, among several other companies.
March 10, 2016
The Most Active VCs In HR Tech And Their 
Investments In One Infographic
a16z, 500 Startups, and NEA are the three most active 
investors in HR tech startups.
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The third- and fourth-most active HR tech VC investors were New Enterprise Associates 
and Khosla Ventures. NEA has made investments in freelance marketplace Elance, 
which merged with Odesk to create parent company Upwork Global. Following the 
merger, NEA invested in a $30M round to Upwork in November 2014. Khosla, which 
ranks fourth on our list, is invested in recruiting software startup Pymetrics, among 
other companies.
 Other firms on the table are SV Angel, East Ventures, Kapor Capital, and Lerer Hippeau 
Ventures
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