HR & Talent Tech startups part of YC 2021 Demo Day.

In September, Y Combinator (YC), one of the most influential entities in the global startup ecosystem, kicked off the Demo Day cycle for its Summer 2021 cohort. It was the time of the year and as a sector-focused investor, we (Talent Venture Group) couldn’t help but dig into the HR & Talent Techs startups part of this summer’s cohort.

A quick overview about the annual marquee event of VCs:

• Per TechCrunch the 377 (!) startups in this cohort have founders from 47 different countries, and 37% of the founders in this cohort were from underrepresented groups. This year, YC’s Summer 2021 Demo Day was held remotely for both investors and media.
• According to Axios Pro Data and YC, more than 1,500 investors tuned into Demo Day last week, generating almost 50,000 investment leads.

Out of 377 startups pitching on the YC’s Demo Day, 52 companies (13.8%!) are classified by us as belonging to the HR & Talent-Tech industry. Out of those, the US has 20 startups. Europe has 11 startups in HR & Talent Tech, 5 of which interestingly are from Paris, France. (By the way, the French Ecosystem is getting more interesting than ever, pandemic notwithstanding. As of October 7th 2021, French startups raised $21.6 billion across 601 rounds, on par with its German counterparts who raised $19.6 billion across 849 deals 2021 YTD, according to Crunchbase).

Like most of the startups joining the Demo Day, a handful of the HR & Talent Tech startups have not raised money yet, while some of them though already have done so from angel investors and VCs including Rocket Internet, Paua Ventures, and others. Notably, prior to joining YC Demo Day, 16 startups have raised an aggregate value of $25 million, with Spain-based Payflow, an on-demand pay startup having raised more than $5 million.

We then mapped out those 52 startups along the HR & Talent Tech Value chain, which includes 6 main areas namely Talent Acquisition, Talent Management, HR Systems & Rewards, HCM (Human Capital Management) Software, HR Strategy, Other HR. Interestingly, we see a significant number of startups (18) part of YC this summer belong to HR Systems and Rewards — a vertical consisting of payroll, HRIS (Human Resource Information System), employee benefits and employee wellbeing.

Drilling down the business models and offerings of these companies, we identified two notable trends that reflect the disruptive changes of the HR & Talent Tech landscape.

• On-Demand Pay — This vertical is interesting as it shows not only an industry overlap but also synergy potentials between Fintech and HR & Talent Tech. The past years have drawn much needed attention to the role of employers in addressing employee’s financial wellness. The transition is noted in how the employees are paid — from a fixed pay period to on-demand payroll. Thanks to advances in cloud and HCM technologies, on-demand pay can calculate daily how much an employee is actually owed and enable employees to receive their wages before their next normally scheduled payday. Data has shown that On-Demand Pay can lead to a more engaged workforce and lower employee turnover. Of 52 HR & Talent Tech companies part of YC’s Summer 2021 Demo Day, 5 startups (Abhi, Payflow, Monto, FloatPays, Monet) are on-demand pay solutions.
• Mental Health — That’s right, we’ve recently talked about Mental Health in one of our TVG HR & Talent Tech Tech Deal Radar newsletters (for which you are always welcome to sign up anytime here). The current economic crisis has also made employers rethink the employer-employee relationship and prioritize the well-being, both physically and mentally, of employees as people over employees as workers. In August, it was reported that companies such as Bumble, LinkedIn and Nike have each shut down for a week in recent months, hoping to reduce employee burnout and reset before returning to the office after a traumatizing year. As of September 2021, we have seen $801.2 million invested in corporate mental health across 10 deals worldwide. Employers’ priority on the corporate mental health issues creates opportunities for SaaS businesses in the space to thrive, such as those pitching on the YC Summer 2021 Demo Day namely Iona Mind, MindFi, Intellect, mello.

In case you want to marinate on these 52 HR & Talent Tech companies that pitched on the YC’s Demo Day companies, we have reviewed and profiled and put them on a list here. Enjoy the list!

📚 For your information: We started the TVG HR & Talent Tech Deal Radar newsletters a couple of months ago where we collect deals, spot trends and report short insights of the market on a weekly basis. If you’re interested in the HR & Talent Tech space and would like to read more analyses like this post, we welcome you to sign up for the newsletter here.

Happy reading!