With an overwhelming number of millennials still out of work despite a slowly recovering U.S. economy, venture capital firms are rushing in to back new recruiting and human resources tools to make the job hunt a bit easier.
The unemployment rate in the U.S. is hovering around 6.3 percent, according to a June 6 report from the Bureau of Labor Statistics, but for the millennial generation (18-29 years old) the number is higher. According to a report from the advocacy organization, Generation Opportunity, about 15.5 percent of millennials are currently unemployed.
With hiring, employee retention and career planning becoming more important for businesses, and with so much demand for new jobs in the economy, it’s no wonder venture capitalists have boosted their spending on apps targeting human resources and recruitment.
In the second quarter of 2014 alone, investors spent $294 million on new human resources software and services, according to CrunchBase. The biggest rounds went to companies like Zenefits and Work4 Labs, but a number of companies are beginning to emerge and gain traction, offering services to millennials and new college graduates.
“If you look at the [human resources] market, this is a very big market that’s grown very quickly,” says Mike Zappert, a principal with Adams Street Partners, which invested in the most recent financing for the human resources and workforce analytics toolkit, Visier. “This is at least an $8 billion market.”
While job retention, career training and advancement represent one end of the market, tools to attract new hires, represent another significant slice of the employment pie. In recent months, companies have staked out various strategic partnerships as the market for millennial mind share starts getting crowded.
Collegefeed, a company backed by institutional investors Accel Partners and S-Cubed Capital, recently connected with DirectEmployers — a network of 800 of the country’s biggest employers — to provide exclusive opportunities for its network of candidates.
“College recruiting is a big pain point for all of the DirectEmployers members, and collegefeed is going to be the solution for that,” says chief executive officer Sanjeev Agrawal. The DirectEmployers channel is a huge win for Agrawal’s nascent startup.
“Colleges in our world are getting a lot more ‘with it,’ where the provost and the career center are waking up to the fact that parents and students want employment after college,” says Agrawal. In some ways, he says, collegefeed is a way to dilute the power of the old-boy network and get qualified candidates in front of companies without the old-school country club networking between parents’ contacts.
“It is the nature of the millennial audience that is being attracted to sites like ours,” Agrawal says. “They are sick and tired of the SimplyHireds of the world. Given the choice between a new software as a service platform like collegefeed and LinkedIn, which is their parents’ network, they’ll choose the SaaS site.”
Agrawal isn’t alone. Sites like CareerSushi and Raise Your Flag are both trying to connect graduates with employers, although Raise Your Flag has a somewhat different approach. Rather than take on college graduates, the company is looking to link high school graduates who don’t intend to pursue a secondary education with employers and career paths that can help them succeed.
“Almost half the kids in North America aren’t going to college after they leave high school,” says Ryan Porter, the co-founder of Raise Your Flag and a motivational speaker. Porter never attended college himself, instead becoming a motivational speaker on the subject of pursuing your dreams without a college education.
A graduate of the Jolt Accelerator program in Toronto, Raise Your Flag has also gained some initial customers among big companies that are looking for access to potential employees. “They are promoting their company, their culture and their career paths on the site,” says Porter. “They want to make sure that when employees start with those entry-level positions they know there is a bright future for them down the road.”
In all, investors have backed hundreds of entrepreneurs looking at ways to solve the recruiting, hiring and retention problems that bedevil the creation and retention of a modern workforce.
Entrepreneurs aren’t the only ones grappling with these issues, either. In April, the White House launched a new initiative to providing grants to high schoolers to pursue college education and employment opportunities. The White House established 24 Youth CareerConnect awards providing $107 million to local partnerships with education agencies, workforce investment boards, institutions of higher education and employers to redesign the teaching experience and provide students with industry-relevant education to receive post-secondary education or registered apprenticeships.