The circumstances of COVID-19 are driving learning, virtual, and employeeÂ engagement technology investment.
By Larry Basinait
While the economy was slowed by COVID-19 in the fourthÂ quarter of 2020, the development of new HR technologiesÂ continued at a rapid pace. In total, there were 127 majorÂ announcementsâthose with at least $1 million in fundingâup substantially from the 77 announced in the third quarterÂ of 2020. Private equity and venture capital firms continuedÂ to invest heavily in HR technology, totaling $1.02 billionÂ in the quarter, down 13.3% from $1.18 billion in the thirdÂ quarter. The average investment declined from $26.0 millionÂ to $16.5 million.
Seventy-nine of the announcements were from companiesÂ located in the United States, two from Canada, 24 fromÂ EMEA, 13 from APAC, and one from Latin America.Â Additionally, there were eight joint announcements byÂ geography: four U.S./EMEA, three EMEA/APAC, and oneÂ U.S./APAC. In the United States, 24 of the announcementsÂ were from companies in or near Silicon Valley, while in theÂ EMEA region, 10 were from London-based companies. TheÂ most common type of announcement was funding-related,Â with 68 citations. There were 34 product announcementsÂ and 25 merger and acquisitions. Funding-related activityÂ increased dramatically, up 47.8 from the third quarter whenÂ there were 46 announcements.
Learning and upskilling products and funding were a bigÂ part of HR technology in the fourth quarter of 2020. WhileÂ these announcements cannot entirely be attributed to aÂ response from the worldwide pandemic, there was certainlyÂ an uptick in this area. In the quarter, there were 18 separateÂ accounts that addressed upskilling or learning.
Announcements that addressed working in a virtualÂ environment were also frequent, with 13 new emergingÂ technologies. Solutions for increased employee engagementÂ were noted 13 times as well, showing overlap betweenÂ employee engagement and remote work solutions. ForÂ example, a mobile communications platform might includeÂ tools to drive employee engagement. Generally, there wereÂ about 40 announcements that pertain to the current realityÂ of a year-long pandemic.
2020 in Review
Despite the worldwide pandemic, 2020 was a remarkablyÂ busy year for HR technology announcements. There wereÂ nearly 400 major announcements made globally, up fromÂ 288 in 2019, with nearly two-thirds (64%) of them fromÂ North America-based companies. The worldwide investmentÂ in funding alone was over $4 billion, though that was downÂ a sizable 41% from the year before, resulting in an averageÂ investment decline of $13.5 million, down to $10.5 million inÂ 2020.
The technology with the largest investment was learningÂ solutions, with a $780.2 million investment for theÂ year. Again, there is some overlap between technologyÂ categories, but the takeaway is that developing andÂ upskilling the workforce were paramount in interest.
Artificial intelligence (AI) and machine learning (ML)Â technologies were once again prevalent in 2020. In total,Â there were 63 citations of products incorporating AIÂ technology, up from 38 in 2019 and 25 in 2018. AI or MLÂ is more a means to an end in producing technology forÂ recruiting, learning, or engagement, among other areasÂ related to HR.
The impact of COVID-19 was more clearly felt in theÂ engagement/virtual/mobility technology. Because of theÂ vastly increased number of workers operating out of aÂ remote environment, technology was needed to betterÂ serve this population. Organizations were looking for waysÂ to keep their remote workforce engaged and were lookingÂ to leverage virtual or mobile technology to continue theirÂ business operations. The amount of activity in this areaÂ increased throughout the year, resulting in investmentÂ totaling $345.1 million.