Investors are heading straight for HR tech startups

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Mumbai: HR tech startups, offering comprehensive HR management to companies large and small, are gaining ground among the investment community. About $ 200-250 million has been raised by such companies from investors since January, according to data collected by ET.

With small and medium-sized businesses also needing cloud-based HR solutions, there’s a huge market these companies are looking to address, venture capitalists, HR experts and bankers told ET.

Companies like Apna.co, My Ally, Refyne, DarwinBox, Sense, Advantage Club, and Protonn have been raising capital from venture investors since January.

The opportunity in the sector presented itself in two ways. On the one hand there is an ongoing formalization in the sector and on the other hand there is an accelerated pace of digitization. With this, the market opportunity is huge and reaches several billion dollars, said Apna.co founder Nirmit Parikh.

In June, Apna.co raised $ 70 million in a round that quintupled its valuation from the previous March round to $ 570 million after funding.

The flow of business in the sector increases every month.

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These deals are indicative of action in space and experts believe they will intensify.

There is unmet demand from small and medium-sized businesses looking to establish HR solutions within their organization. These companies prefer cloud-based, technology-centric offerings and therefore HR tech companies are gaining ground, said Mohan Kumar, founder of Avataar Ventures. His company conducted a $ 16 million round of AI-powered talent engagement and communication platform Sense in June of this year. For decades, this space has seen no interruptions and has been dominated by a few large companies. But now, startups are bringing value and bridging the gap, particularly by addressing the needs of Gig and temporary workers. The total addressable market is huge, he said.

The Covid-19 pandemic has led to a paradigm shift in the way HR functions are performed. Whether it’s hiring, induction, training, preparation, evaluation, or any other people-related function, the massive shift to remote or hybrid working models has transformed the role of HR. This is giving a boost to HR technology, an area that has mostly been untapped so far, but where a lot of investment is now taking place.

Unlike e-commerce or any other area that has been accelerated due to the pandemic, HR technology is an area where there was almost no use case until the pandemic forced the widespread adoption of work from home, said Anshuman Das, CEO of CareerNet and Longhouse Consulting. The economy around HR technology was created in a post Covid way and will see more innovation in the coming days. The opportunity in this sector is huge and it is here to stay. ”

Experts believe that an increase in the gig economy will further accelerate the trend. The whole realignment in the sector will lead to more funding. Employee well-being and skills enhancement are also proving to be an emerging theme within the human resources technology space.

HR-based startups are sparking interest as they are bringing talent management and skills to the forefront of the organization. In a rapidly changing workplace and workplace, CHROs equipped with cloud-based HR solutions will drive this transformational shift and define the new world of work, said Ankur Pahwa, partner and national leader of e-commerce and consumer. Internet of EY India.

For companies that have broken through the Indian market, culturally similar markets such as Southeast Asia, the Middle East and North Africa (MENA) are the next steps in growth.

“We are preparing to bring our platform to a new, unexplored customer base internationally, particularly in the SEA, MENA and North American markets, and to add financial wellness products such as Early Wage Access to our existing comprehensive employee engagement platform. “said Sourabh Deorah, co-founder of Advantage Club. The company says it is chasing a $ 13 billion revenue opportunity in this space.

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