Why Job Boards Led All of 2018 Global HR Tech VC

Peter Weddle

By George LaRocque, Principal Analyst and Founder, #HRWINS

Job boards raised a staggering USD 961 million in venture capital in 78 funding deals globally during 2018, according to our latest HRWins research and VC reporting. Led by massive rounds for China’s Maimai (USD 200M), and the U.S.’s ZipRecruiter ($156M) and ScoutExchange ($100 million), the job board tech category eclipsed even the combined categories of core HR and payroll (USD 774M). Total HR technology VC raised in 2018 was a whopping USD 4.01 Billion.

I see four key things driving this:

1. Investors can quickly get behind a marketplace model, and job boards are inherently just that.

Job boards inherently offer a two-sided marketplace of candidates and employers. Both are buying. Normally one is paying. You don’t have to be an HR tech or talent acquisition expert to understand that math. The proliferation of niched hyper-focused job sites proves that the right focus and solid execution can build a solid foundational business. Job boards that provide more tech and more significant brand reach are enticing for VC focused on larger mega-rounds.

2. The labor market continues to tighten, and the widening skills gaps make job boards with the right focus a good bet, even in a recession.

Sustained record-low global unemployment means that talent is scarce in most industries and job types. New in-demand hard skills like cloud computing, artificial intelligence, and analytical reasoning are emerging faster than employers can keep up. Now “soft skills” like creativity, persuasion, and collaboration are reported to be more critical than ever. Even if the market tightens, hard skills that are not just hard to find, but not-yet-existing in required numbers in the global talent pool, and soft skills that are difficult to hire for with a mechanism to assess a sizeable global talent pool, may put job boards focused there in a strong defensible position. Even in the possibility of an economic recession.

3. The total addressable market (TAM) is growing. The serviceable available market (SAM) is becoming more visible.

Recent HRWins research and reporting put the U.S.-only total available market for HR technology in 2019 at USD 160 billion. The serviceable available market for 2019 is USD 51.2 billion. These numbers are for technology alone. Total revenue for the global online job sites market in 2018 was $8 Billion and projected to grow at just under 18%, according to IBIS World. The total market for “recruitment spend” has been estimated as high as $200 billion by some analysts, based on average cumulative total spend per hire. Innovative job boards are starting to offer more than just ad placement and candidate conversion. More and more hybrid models are entering the market, providing complementary technologies and services, and in some cases full recruiting tech platforms. Extending your tech offering is not a new strategy, but the growth in the TAM and SAM numbers correlate to the growing sophistication of the SMB and middle markets; it may be an approach whose time is finally due. Small and middle-sized employers are finding themselves competing to find and retain talent with large global enterprises. The capabilities they need in recruiting tech are more comprehensive than we’ve ever seen. Recent moves by LinkedIn, Google, and the long-standing model of ZipRecruiter demonstrate the market need for features and services beyond candidate attraction. Job boards are uniquely positioned to provide the SMB and middle-markets a platform option, which buyers prefer.

4. Job boards are innovating.

While it’s true that a large number of existing job boards are nothing more than ad posting and resume collection sites (and many of them profitable, by the way), it is also true that innovation is strong in this category. Whether it’s ushering in the new and expanding contingent workforce, applying new technologies like artificial intelligence and machine learning for better job matching, striving to close the widening skills gaps by providing education for candidates, or helping employers increase the diversity of their candidate pools, job boards are in a unique position to have an incredible impact. Job boards touch a large number of employers and candidates like almost no other category in HR technology, and they are bringing innovative business models and technologies to market as they rise to the challenge.

A little free advice for the job board industry:

It’s been a banner year for job boards when it comes to raising venture capital. If I could speak to the industry as a whole, I would give them the same advice I give every HR tech startup founder that just closed a significant round: You’ve worked hard to prove yourself and earn this funding. It’s never easy. Closing this round feels like a great accomplishment, and in the sense that it validates your business as it is today and gives the nod to your current plans, it is. However, this isn’t the end of a process; it’s the beginning of something new. So, congratulate the team, thank your investors, and get back to work. The real opportunity to prove yourself is just beginning.

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