Today we announced our investment in Talentry, the Munich-based social recruiting software platform that enables companies to find and hire the talent they need. This is our first investment in Germany from our current €155 million fund and the kick-off of our German operations.

Founded in 2013, Talentry is a software platform that enables social recruiting by using the employees’ networks. Talentry allows companies to structure and execute successful employee referral Programs increasing the ratio of hires through referrals by more than 200%. This generates enormous costs savings for the clients but, more importantly, it allows Enterprises to get the right talent with the best fit for the company.

We first met Talentry in Q3 2017 at the Saastock in Dublin. From the first meeting with the team it became obvious to us that there is an enormous need for social recruiting at times where digital companies are in a constant battle for talent (we see it every day in our portfolio!), so we stayed in touch until the investment window opened.

Tectonic shifts in the workforce market

Unemployment rates in the strongest economies such as US and Germany are at historic lows. Moreover, if we focus on the digital subsectors of the economy we find low unemployment rates and war for talent across the board. Hence, hiring the right talent is getting more expensive and time-consuming for Enterprises. Talent acquisition costs are growing annually by 7% as a result of a growing demand with limited supply.

In order to acquire the best talent, companies have to become more proactive, engaging in a conversation with potential candidates very early in the journey and nurturing those relationships over long periods of time until the chance to hire the candidate presents itself.

As most candidates are not actively seeking for a job the starting point of such conversation is very often a common connection, a friend, a former MBA classmate, or somebody you know who posts a job offer in a social network.

As the balance of forces in the recruiting market is changing and the talented candidates can now pick and choose, new software tools are needed to help companies cope with those changes. Legacy software tools such as Applicant Tracking Systems (ATS) were designed to help companies manage massive amounts of applicants with focus on process efficiency but today’s talented candidates need to be treated differently. We believe companies will need software tools and processes for recruiting that resemble those used in marketing and sales.

The beautiful scale of employees’ networks

As the largest asset of a company are its employees, a vibrant and engaged employee base can be enormously helpful in recruiting talent. A large employee base has an even larger network of contacts and friends and, therefore, the value of the employee’s networks increases disproportionately with the scale of the company.

This is an interesting example of network effects playing a role in economics. In this case, Talentry does not benefit directly from such effects, but the value of Talentry’s software is disproportionately larger for larger corporations, which creates an interesting opportunity to grow upmarket.

The recruiting marketing platform

Employee referrals is only the tip of the iceberg (a big iceberg though!). Talentry is on a journey to empower employers to develop relationships with potential candidates way before they are seeking for a job and to nurture those relationships at scale until the opportunity to hire the candidate presents itself.

In our view, the future of recruiting for employers shifts away from only tracking candidates into approaching recruiting as a full “employee journey” using processes similar to those used in sales and marketing. This, obviously, requires software tools that are way different than the existing applicant tracking systems and that is where Talentry comes in 🙂