A New Ally on the Candidate Journey: Sharing the Bain Capital Ventures Investment in AllyO
Earlier today, AllyO announced a $14 million round of funding led by Bain Capital Ventures. This is the story of why we invested.
I first met Sahil and Ankit in the fall of 2016. They had just spent several months camped out in Bay Area malls, interviewing retail employees and store managers to deeply understand the candidate journey and hiring process from both perspectives. Their learnings initially led them to launch a tech-enabled recruiting agency, but they rapidly realized they could deliver far greater impact via AI-enhanced automation and candidate engagement.
What if you could automate all the repetitive functions that human recruiters fulfill today? What if you could standardize recruiting workflows into a single interaction stream, from receiving applications and screening candidates to scheduling interviews and gathering feedback to surfacing analytics for HR leaders? What if you could build a “full-stack” robot recruiter that harness natural language processing and conversational AI to interact with candidates 24/7?
That would mean completely reimagining high volume recruiting, a category that spends over $60 billion annually on recruiting. It is one of the largest segments of the US labor market and has been almost completely ignored by HR Tech.
How did we get here?
Employers in categories like retail, restaurants, hospitality, etc. have 67% annual workforce churn and under 5% yield from application to hire. That inefficiency means high recruiting costs via (a) a constant flywheel of job board (Monster, Indeed, Craigslist) and staffing agency spend to backfill headcount and (b) a large internal team of recruiters.
The resulting volume of candidates creates a process bottleneck . However, recruiter workdays (business hours) don’t align with candidate availability (after work) and their processing capacity is limited (Sahil and Ankit estimate under 100 candidate conversation a week per recruiter, from their own experience). Consequently, candidates experience low response rates (~15% hear back) and react by over-applying, perpetuating the problem.
To make things worse, existing job boards are compensated more on volume, not quality, and so have little incentive to solve the yield problem. They also lack workflow tie-ins at employers (e.g., interview scheduling) to own the full candidate experience.
To recap, the vast majority of HR budgets are going to recruiting headcount, job board spend and staffing agency fees. That spend is yielding very mixed results (neither employees nor employers are happy with the employment outcomes) and a very leaky bucket.
The status quo has to change
As CHROs look to the future and talent becomes the #1 differentiator in this digital world, they view hiring efficiency and quality as a strategic issue. Several populous states are sliding up to a $15 minimum wage by 2022. In retail specifically, brick and mortar retailers view in-store experience (and skilled employees) as key to competing with Amazon. Against that backdrop, simply increasing spend on recruiters (5% of annual compensation per hire) or temp agencies (who often charge a 25% markup per hire) is an unsustainable answer.
A solution like Ally, purpose-built to help employers meet and manage their full candidate funnel, could be.
Ally offers full automation of candidate capture, evaluation (screening and assessments), engagement and scheduling, removing the process bottlenecks and scalability issues faced by such employers. Some of the biggest brands across 10+ industries have voted with their feet, deploying Ally across all candidate facing channels.
Doubling down
BCV has deep ties to the HR world through past investments like Taleo, LinkedIn, Hireology, etc. In short, our belief in the AllyO opportunity approach runs deep, which is why we led their seed round in late 2016 and are coming back to lead the Series A. We are also excited to partner with leading AI thought leaders like Anna Patterson at Google (via their Gradient early stage fund), HR powerhouses like Randstad (via its Innovation Fund) and returning seed investors like Cervin.
Ankit, Sahil and the AllyO team have made incredible progress in their first couple of years. We are pumped to see how the story unfolds. Of course, if you’d like to join them on that journey, ping them at careers@allyo.com. They are hiring across the Engineering, Customer Success and Sales teams and would love to hear from you!
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View a complete list of Bain Capital Ventures investments here.
