It’s no secret that 2020 ignited a massive transition to virtual business operations. As the technology that enabled this transition underwent rapid adoption, innovation in the HR Technology world accelerated, bringing talent-related and collaboration solutions from silos into the flow of work and fueling an expansion beyond HR Tech to a broader focus on "Work Tech."
This shift powered robust 2020 transaction activity, centered around three themes:
- AI-powered recruitment process automation
- The importance of learning
- The rise of video
Recruitment Process Automation Leveraging AI Recruitment Tools: 30% of the transactions we tracked in 2020 were related to leveraging technology to create a more efficient hiring process. We expect to see continued activity here, as the 10 million people who lost jobs during the pandemic must eventually be rehired. As companies gear up for an expected acceleration in hiring, more and more will look for innovative tech solutions that can streamline the hiring process and improve talent acquisition results, including improving candidate fit and diversity. Relevant 2020 transactions included Outmatch’s acquisition of Launchpad, Indeed’s acquisitions of ClickIQ and SmartRecruiters’ acquisition of JobPal.
The Central Role of Learning in Engagement, Retention and Productivity: In 2020 we saw learning move to the forefront of how companies engage their key constituents - both employees and customers. Today learning delivered in the flow of work through bite-sized modules is replacing the more traditional classroom setting. Employees consider continuing education as a benefit, part of a broader compensation package. We expect tech solutions that enable and help scale the learning trend (such as video) to continue to attract capital and acquisition interest. Relevant 2020 transactions included: Skillsoft’s acquisition of Global Knowledge, Turning Technologies’ acquisition of Knowbly and Absorb LMS’ acquisition of Koantic.
The Rise of Video as a Powerful Communication and Education Tool: Learning and communication are at the center of engagement, and video is quickly becoming the favored medium. Video lends itself to self-paced learning, and can be consumed on demand - as necessity or convenience dictates. Viewers are 9x more likely to retain information from video versus text. A HubSpot study found that 54% of consumers prefer to see video content from businesses, as opposed to other forms of content. The study also confirms learning’s central role, concluding: “The education aspect is surprisingly popular -- 61% of consumers surveyed want to learn something from the videos they see.” In a world where the need to reskill and upskill employees is increasingly vital, tech- and video-enabled learning solutions will continue to see robust transaction activity. Relevant 2020 transactions included: mPulse’s acquisition of Harbor View client, The Big Know, iCims’ acquisition of Altru and Paylocity’s acquisition of VidGrid.
Other landmark transactions helped to transform Work Tech in 2020:
- Salesforce’s $28bn acquisition of Slack, uniting the top CRM with a leader in digital communication, further enabling remote work and collaboration
- The $4bn direct listing of Asana, workforce collaboration and planning tool
- Cornerstone’s $1.3bn acquisition of Saba, one of the biggest deals in learning systems history, strengthens Cornerstone’s talent management suite
- Kronos and Ultimate Software merged into a $22bn cloud HR company now known as UKG, combining two top tier human capital management suites
In addition, 2020 VC investments in HR Tech reached a record high of $5bn, heavily weighted toward late-stage VC investment. This bodes well for future M&A activity, as late stage VC-backed companies have become increasingly active acquirers. Two of the notable HR Tech unicorns who raised additional capital in 2020 were wellness solution Calm, through its $75mm Series C, and Eightfold AI’s $125mm Series D.
Work Tech in 2021: What to Expect
We see additional emerging themes driving strong 2021 Work Tech transaction activity:
- Workplace Safety and Wellness: Expect to see continued expansion of wellness, including mental, physical and financial wellness. Even as vaccinations are rolled out for the general population, safety practices developed in 2020 will be here to stay. Instituting safety precautions and training programs for businesses of all types, not just those categorized by the pandemic as "essential," will be at the forefront. Physical wellness is an obvious element especially in a pandemic, but also emotional wellbeing, stress reduction, financial well being and a more holistic view of how employers are going to honor their commitment to employees. We expect these themes to drive demand, innovation and consolidation.
- Diversity and Inclusion: 2020 placed a spotlight on compensation gaps and underrepresentation of minority groups and women in workplace leadership. Expect to see further focus on ESG initiatives to begin to close the divide. For more on what to expect from the growing ESG trend, see our recent piece.
DISCLAIMER This presentation is intended for information and discussion purposes only and does not constitute legal or professional investment advice. Statements of fact and opinions expressed are those of the participants individually and, unless expressly stated to the contrary, are not the opinion or position of Harbor View Advisors, LLC (“HVA”). The information in this presentation was compiled from sources believed to be reliable for informational purposes only. HVA does not endorse or approve, and assumes no responsibility for, the content, accuracy or completeness of the information presented.