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HR Tech Funding was off the charts in 2021...

Anita Lettink

Jan 12, 2022

I hope you enjoyed a relaxing break and are ready to take on 2022!

In this first issue of the year, we'll look back at the massive amount of venture capital that went to HR Technology companies in 2021. And I reveal my plans and initiatives for the new year. Let's get started.

HR Tech's best year ever!

There's no doubt about it: If you are the founder of an HR Tech company, 2021 was the best year ever to secure funding.

HR Tech companies raised more than 12 billion dollars in 2021. It’s extraordinary, especially when you realize that this is more than 2019 and 2020 combined!

And with 21 new unicorns, we can safely conclude that 2021 was HR Tech’s best year ever. I registered $12,275,512,500 across 330 VC deals. It is even more impressive because I use a restrictive definition of HR Tech, that excludes so-called worktech, job boards, gig platforms etc.

The funding went to 308 companies and 22 of them raised money twice. The investments cover the whole spectrum of HR services, but with $4.6B in funding, HCM Suites & Pay solutions stand out as the clear winners. And considering the focus on labor shortages, you won’t be surprised to hear that Talent Management and Talent Acquisition are next in line, but with a surprising twist!

HR equals cloud

All these companies create SaaS solutions with subscription revenue models: modern HR only runs in the cloud. Artificial intelligence, machine learning, automation and analytics are must-have components. And with best-of-breed as the dominant strategy, young API vendors behave like fintechs and are looking to disrupt the landscape.

The outcomes of these investments will be featured in 2022 and I’m excited to see what these companies will deliver. It will also be interesting to track what they do with that money. At a minimum, they already created 1000s of jobs: from sales & marketing to developers to backoffice personnel. And almost all of them are remote companies that allow people to work from anywhere. The future of work has arrived!

To be clear: not all of them will be successful. And investors don't give them upfront access to the full funding amount. They typically set performance metrics to unlock a next batch of money. So I will be keen to understand how well they are doing. More to come in 2022.

You can find details in the report (free download link) including:

- geographic spread

- deal values

- largest and smallest deal

- highest and lowest month

- an analysis and what's next

and much more!

Feel free to share the report. And if you have a question, let me know.

Metaverse at work?

You can't have missed the latest hype: the Metaverse has arrived. We'll all move to a virtual world, where we spend most of our days as an avatar attached to a headset. To be honest, it isn't my idea of a fun work environment.

And I could easily dismiss the whole idea as too farfetched or something for nerds and geeks, if it weren't for Microsoft. When a company that owns so much of our office solutions throws their weight behind a new concept, you know eventually we'll see it pop up in our work life.

Make way for the creators

In addition, a record number of people started their own business and joined the Creator Economy. This often starts as a side gig, to ensure an income stream and not completely rely on an employer. The side gig provides a sense of purpose that people don't find at work. Many companies (esp social media vendors) are expanding their solutions to support these independent creators and help them monetize their activities.

So this year, I will pay special attention to two new Future of Work topics:

the Metaverse
the Creator Economy

You might think that they don't apply to your business today, or they have little effect on the way you work. And you might be right. But there's no way to know for sure unless we fully understand the implications.

2022 Plans and initiatives

As I explore what these trends could mean for work, I'll take you with me on a discovery journey. Here are my plans:

Every day, I share one interesting Metaverse at Work article that I've curated for you. I'll add a short analysis. You can find it at https://metaverse-at-work.com. Or subscribe to the RSS feed. I'll also share it on Twitter.
Twice a month I will interview someone with an interesting take on the Future of Work in a TwitterSpace. You can join me for the live conversation. And I'll post a link to the recorded podcasts in this newsletter.
Join my brand new Future of Work Twitter Community to meet like-minded people and discuss new ways of working. Or follow me on Twitter to receive an invitation.
I'll share insights on LinkedIn every Tuesday and Thursday. You can connect with me and I'll be glad accept your invite.
And rest assured, this newsletter continues on its current schedule and you'll receive it the first and third Wednesday of the month.

As you can see, I am kicking off many initiatives and the success depends on your input and participation. I hope you join me!

Have a great day, Anita

More Future of Work Insights

2022 Trends

December is the month for trends and outlooks. But what is so unique about January 1st that it warrants a rethink of what we'll do ? Does your business completely pivot on that date? I've started to ignore trend reports, especially since I discovered that a couple of 2022 trend reports were mirror images of the 2021 edition. But if you are interested in reading these reports, here are two suggestions:

7 Future Of Work Predictions For 2022 was written by a venture capitalist and focuses on solutions and technology. Trend 2 and 3 point out how important automation and data infrastructure layers will be. It's less about 2022, and more about equipping yourself for the future of work.

This 2022 Round up Page offers trend reports on many topics: from marketing to creative to crypto and the future of work. You can download these reports straight from the page without leaving your personal data.

Can humans and AI work together?

I wrote about the labor shortage in my last newsletter and suggested that we look at automation as a solution. Robotics have come a long way and we're getting to the stage where RPA can replace repetitive activities. (Rest assured, I still believe that automation will replace some of what we do, but not all.)

Kai-Fu Lee explores this topic in this excellent article: Can humans and AI work side by side? A guide to what comes next. But I don't agree with his view that blue collar workers are most vulnerable to automation. I'd say that white collar workers carry out more activities that are repetitive and can be easily automated. What's critical during this transformation is how easy people can reskill and move to a different occupation. Read the article for its forward looking view on automation and suggestions for the people function.

Work as a video game

I often listen to podcasts during my daily lunch walk (highly recommended). This week, I had high hopes for What if work were a video game? where Kara Swisher interviews Phil Spencer, the head of Xbox and executive vice president of gaming at Microsoft.

And even though the podcast only briefly touches on this topic and the conversation quickly switches to games, there are parallels with virtual work. From the treatment of female players to what constitutes harassment to moderating behaviors and conversations. When you listen to this conversation with that perspective in mind, you’ll gain valuable insights that can be applied to the virtual world of work.

And an invitation

My next keynote is for Cognisium on Wednesday February 2 at 10am CET. The topic: Skills, the Global Currency in the Future of Work. We'll discuss why skills are so crucial to thrive, and how people leaders can prepare for the skills-based economy. Register to obtain a free ticket.