Just as the way people work has continued to evolve, the way investors look at tech to manage that workforce has changed in the past year.
Venture funding to the plethora of startups providing tools and platforms in the human resources space exploded in 2021 — as it did in most sectors — with innovative startups locking up more than $10.5 billion in over 800 deals globally, per Crunchbase data.
Last year, such startups had similar luck, raising more than $8 billion in nearly 700 deals even as the venture market cooled.
However, venture funding in HR has been called into the office (so to speak) through the last four quarters, taking in less than $3.3 billion as deal flow also slowed.
In fact, the recent second quarter was the slowest in the sector for venture dollars in three years and put HR tech startups on pace to raise about $3.3 billion for the current year.
No big money
In addition, large growth rounds in the space have virtually disappeared, with only two rounds of more than $100 million raised.
Even the numbers this year are slightly inflated, thanks to San Francisco-based HR management company Rippling’s massive round back in March as the Parker Conrad-founded company was caught up in the collapse of SVB, its primary banking partner. The company quickly raised a $500 million Series E funding — that valued the company at $11.25 billion — from existing investor Neil Mehta at Greenoaks.