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By George Markakis, Managing Partner at Venero Capital Advisors
The next 5 years will be some of the best that HR Tech and WorkTech have ever seen! Here is my take, from 1000+ conversations this year with M&A acquirers, PE firms, PE-backed companies, VCs, growth stage startups, and established HR Tech vendors.
HR technology has entered a new phase in its evolution. Long gone are the days when investors questioned whether companies would adopt new Work Technologies. Now we are debating the extent to which AI will disrupt systems of record and traditional workflows. And with macro headwinds turning into tailwinds, the landscape will change dramatically!
The implications are profound both for HR Tech investment and M&A.
For investment:
VCs now have the opportunity to support startups that may eventually take down the Workday’s and SAP’s of the world. The next wave of innovation is driven by commoditized (!) AI, digital agents, new ways of working, streamlined candidate & employee experiences, and evolving customer expectations.
Later stage investors can support the long list of HRTech companies that have gained scale, momentum and structural profitability in their respective areas of focus. And there is a ton of them!
For M&A:
Consolidation amongst adjacent HR tech segments will continue in full force. This is driven by customer needs, opportunities for synergies, and economies of scale.
PE firms will play a major role in M&A, supporting growth, internationalization, horizontal expansion, operational improvements and buy & build strategies, while offering liquidity to earlier stage investors.
HR Tech has matured so fast over the last 10 years. And it is now firmly in the SaaS major leagues.
Hang on for an amazing ride!
Reprinted with permission
