Tech Startups May Shun HR, But It Hasn’t Stopped Investors From Funding Data-Driven HR Tech

Tech Startups May Shun HR, But It Hasn’t Stopped Investors From Funding Data-Driven HR Tech

At startups racing to hit board-level growth promises, investing in HR can fall behind other priorities, as it’s often viewed as a (sometimes unnecessary) cost center.

 

But playing fast and loose with sound management practices has had consequences for many startups. Indeed, it’s so common for startups to forego HR that it can take a public relations crisis or two for even the largest of startups to make proper investments in HR.

 

Hope isn’t lost, however, for human resources managers across startup land. Datum is beginning to inform the decisions HR makes in regards to recruiting, hiring, and maintaining policy in the workplace. And, increasingly, startups and investors are coming together to help HR departments quantify those decisions in relation to the bottom line.

 

For employers, this could mean a more effective HR department. And for beleaguered HR personnel, it’s more ammo to justify continued investment in an otherwise underappreciated role.

 

So just how much are investors putting on the table for HR startups that focus on providing insight via data and analytics?

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2017 Raises The Bar (With Caveats)

 

The picture stays rosy as we look at 2017 to date.

 

Investment in the sector is set to double 2016’s funding haul, with current investment residing over $114 million.

 

But there is reason for cautious trepidation in regards to the numbers.

 

Much of 2017’s performance has been bolstered by large follow-on rounds into Visier, Reflektive, and Culture Amp, who have collectively raised over $90 million—accounting for 78% of this year’s total funding haul. Furthermore, round counts are down, with investment in seed-stage startups dipping slightly when compared to the previous year.

 

However, that does not explicitly mean funding will go up or down in the future.

 

“When fundraising, we had a lot of fun and had a lot of interest in what we were doing in HR,” Ashik Ahmed, CEO, CTO, and co-founder of Deputy, told Crunchbase News. For Deputy, a data-driven workforce management solution for HR, all that fun lead to a $25 million Series A led by OpenView.

 

However, according to Ahmed, there’s still “a lot of work to be done” in the field. So far, investors are showing increased interest in funding that work. For HR professionals, it is likely welcome news. And for founders who wish to innovate in the space, there’s a lot of room, and potentially a lot of money, to work with—barring any future blips in funding.

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