Before Pandemic: Healthy Investment in HR Technology

Urban Money

In the weeks before the COVID-19 pandemic began its trans-global spread, investment in HR technology totaled about $867 million. That first-quarter 2020 mark was less than the 2019 fourth quarter’s $1.1 billion, but greater than the 13-quarter average of $841 billion.

The first-quarter investment activity doesn’t reflect any significant impact of the coronavirus, according to the most recent Global HR Tech VC Update from HRWins. However, the firm expects investing in the industry to slow during the second quarter.

The number of deals ticked up during the period, from 48 to 56. Most of those—17 transactions worth a total of $508 million—involved HCM technology. Talent acquisition saw 27 deals totaling about $206 million, while talent management saw 12 deals worth about $153 million. As HRWins noted, the value of HCM technology investments was more than that of the other two categories combined.

1Q investing in #HRTech was healthy enough, but experts expect a slip this quarter as #COVID-19 continues. #HRTribe @glarocque Share on X

HR Technology’s Global Footprint

The investment activity was spread across 18 countries, with the most—24—taking place in the U.S. Another eight deals were closed in the UK, while Germany and India saw three each. The report said more deals are beginning to appear in Asia and South America, but the lion’s share continue to originate in the U.S. and Europe. The report estimated the average seed round was worth about $2.3 million.

Series C rounds accounted for the most value, about $470 million spread across 10 deals. Twenty seed-round investments totaled about $46 million.

Precisely how the pandemic will impact investors approach to HR technology isn’t clear, though analysts, industry executives and HR leaders have remarked that this is a moment for collaboration and communications solutions, digital recruiting and video interviewing platforms to shine.

Vendors in those spaces are trying to both support existing customers’ needs and respond to a dramatic uptick in new inquiries. HR departments are struggling to support remote workers with proper policies and equipment, while talent acquisition teams seek to maintain relationships amidst hiring freezes, recruit and onboard a surge of new workers in others and continue to identify new talent in still others.

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Image: iStock

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