Toronto’s ClearFit, a company that uses automated software and algorithms to bubble up the top applicants for employers looking for quality hires, today announced the close of a $7 million Series A round. The financing, led by Boston’s GrandBanks Capital and including Relay Ventures, will help ClearFit grow to keep pace with demand, company co-founder and CEO Ben Baldwin told me in an interview.
ClearFit offers for small businesses the kind of software-based candidate evaluation that has traditionally be out of reach for those who aren’t large enterprises. The system works by evaluating the fit of applicants based on a questionnaire and profile-building process that takes candidates around 12-15 minutes to complete, which is then measured against predetermined criteria to determine whether or not the candidate is a good fit.
Baldwin says that its predictive analysis techniques are on average five times better at anticipating candidate job success than rival tools, according to its own research, and the way it proves this to clients is by giving them a free trial of the product for their first hire. Pricing is the same as it would be for a traditional job posting in other online HR sourcing destinations, which is why it becomes affordable for small business customers who might be skeptical about turning over their hiring practices to what is essentially an automated process.
ClearFit’s core customer audience is precisely the type of audience that might hesitate about a tech-centric solution, since it’s made up of small businesses operating mostly in the offline world, including construction, retail, restaurant and hospitality. But those customers are actually hungry for a tech-based option, he says, after having been burned by the inconsistency of recruiters in the past. These customers are spending on the problem, and that’s the bottom line for ClearFit, Baldwin says.
“We focus primarily on main street businesses, who are spending $60 billion on this problem, and there’s a massive pain point, but we don’t have enough money to help them,” he explained. “That’s why we raised this round, really to hire to meet that demand. We’ve been surprised by how much demand there is without doing a ton of work on awareness.”
Baldwin says ClearFit is looking to staff up with engineering, marketing, and HR coaching staff. The coaching positions are a relatively new addition, to help customers navigate the transition to a software-based solution. Part of the staffing approach at ClearFit to date has been hiring young entrepreneurs who are maybe looking for a primary revenue stream while building their own companies, Baldwin said, which has been a great help in getting knowledgeable people on board to cover specific verticals.
The $7 million raised today joins the $1.7 million raised in late 2012, bringing ClearFit’s total financing to $7.7 million. Baldwin says ClearFit hasn’t yet turned the corner on profitability, but that’s mainly because they’ve been so concerned with growing rapidly enough to keep up with demand.