Onboarding, employee engagement and workplace flexibility are the three main challenges that high growth technology companies are looking to solve in the HR space, according to a venture capital firm which actively invests in such companies.
“In looking at how to resolve these, companies see software solutions as critical enablers,” said Jerry Stesel, founding partner of Our Innovation Fund, an Australian-based venture capital firm which invests in innovative high growth businesses.
Stesel explained that the firm partners with “exceptional entrepreneurs” building leading high-growth, early-stage technology businesses, and with the vision, talent, focus, hustle and grit to create truly impactful businesses.
“We look for companies both in the HR space and more generally which are solving real problems for their customers in a differentiated and defensible way,” said Stesel.
“As a result, spotting winners comes down to the team, the problem they are solving and their ambition to grow into global businesses.”
Stesel gave the examples of portfolio companies including Go1 (used by companies including SEEK, ANZ, Delta, NBC, QLD Government and Foxtel), Enboarder (used by companies including Qantas, Walmart, HSBC, GE, Samsung, Deloitte, Electronic Arts, Westpac and Canva) and Earnd (used by companies including Adina, Best & Less, Glue Store, Vibe Hotels and Harris Scarfe).
“These customers of leading technology companies indicate that the challenges facing HR companies are ubiquitous, and Australian technology companies can help close these gaps, globally,” said Stesel, who recently spoke at a future of HR summit hosted by Herbert Smith Freehills.
“For example, it is quite human to make an offer of employment to someone and for a manager not to contact them until the day they start their new role,” said Stesel, who explained that Enboarder allows managers to be prompted to ‘be human’ and speak to employees before they start which helps their onboarding process.
Michael Gonski, a partner in Herbert Smith Freehills’ employment team, observed that it is hard for businesses to control how their managers deal with employees without technology.
“Access to information is key to employees,” said Gonski, who gave the example of Go1 which provides employees with access to 60,000 courses, as well as Circle In which provides employees with support around parental leave and related information.
“Spotting winners comes down to the team, the problem they are solving and their ambition to grow into global businesses”
Stesel explained that some of Circle In’s partners didn’t have a list of who was on parental leave to even contact them in the most basic scenarios (such as Christmas parties) let alone being able to build a one-on-one relationship with each employee on parental leave to make the reintegration back to work easier.
“Similarly, Earnd is the leading ‘future of pay’ financial technology provider, empowering people to access their income as they earn it,” he said.
How VC companies help HR start-ups grow
High-growth tech companies face a unique range of challenges, and venture capital firms are in a unique position to add other kinds of value apart from investment.
“We treat our portfolio companies as our customers, so the value that we provide to them is critical to the ongoing success of our business,” said Stesel, who explained that there are a number of key ways company founders value such help.
Strategic advice on key business decisions around hiring, capital raising and strategic vision is particularly important.
“In Australia, recruiting talent is always time-consuming and difficult,” he said.
“Due to the wide stretch of experience of our partners, venture partners and broader network, we have helped all of our portfolio companies attract, recruit and retain key senior key hires.
“In addition we assist in interviews and making sure there is cultural alignment as needed,” he said.
Our Innovation Fund’s internal team is also diverse, and Stesel said this helps create value in a number of ways, including a broader network which then facilitates customer introductions.
International growth is also important, and nine out of the firm’s 11 portfolio companies now have operations in the US.
“We assist them with everything from flipping up to a US corporation where required by US investors, to assisting with first customer introductions,” said Stesel.
“These customers of leading technology companies indicate that the challengers facing HR companies are ubiquitous, and Australian technology companies can help close these gaps, globally”
For example, when portfolio company Enboarder expanded into the US, the firm assisted with the introduction to Walmart, a founding US customer and the largest global private employer.
Being a venture capital firm, it can provide extensive assistance with raising additional capital where required from Australian and offshore investors, as well as exits when the time is right, according to Stesel.
Key technology trends for HR
There are a number of important trends in the HR technology space, according to Gonski, who said there will be continued investment as businesses realise that keeping employees happy and engaged is good business in tough markets – especially where salary is not always the determining factor in whether or not employees will stay with them.
Stesel also noted that the increased adoption of technology is shifting the mandate of a traditional HR manager from administrative to more of a strategic role, with many of the administrative tasks being performed by software programs.
“We see that this function is only becoming more strategic, as a company’s HR strategy can be used as a source of leverage to recruit and retain their employees,” he said.
“Tactically, this means that the HR representative’s voice will become even more prominent around the C-Suite table.”
He cited the recent example of Jamie Dimon, CEO of JP Morgan Chase, who said that in addition to focussing on shareholder interests, “corporations must change the way they operate and now focus on their employees, the places where they conduct business and their vendors to ensure that everyone is treated fairly.”
High-growth technology companies are essential in assisting HR managers to execute on this strategy, Stesel said.
“We can see these solutions enabling HR managers, and allowing them to focus on the strategic direction and culture of the business.”