The global market for jobseeking and hiring services is estimated to be worth some $85 billion, and a startup called ZipRecruiter is today announcing a significant round of funding that it hopes will help it be a key player in an evolving recruitment market.
The Santa Monica-based company, which provides an aggregating platform for small and medium businesses to post and distribute job opernings and connect with relevant people looking for work, is today announcing a Series A of $63 million — notable not just for its size, but also because it is the first external money that the startup has taken in the four years since it was founded. The round is being lead by Institutional Venture Partners (IVP) — backer of other notable aggregating platforms like Kayak and HomeAway; business service portals like LegalZoom; and sites like Dropbox, Snapchat and Twitter — with participation from also from Basepoint and Industry Ventures. Basepoint is a new firm based out of LA founded by two partners from another Southern CA firm, Rustic Canyon. This is its very first investment.
ZipRecruiter is adding some 30,000 new registered users each month; is already profitable; generating “high tens of millions in yearly revenue”; and is on course to double sales year-on-year, CEO and co-founder Ian Siegel tells me. The reason for raising money, therefore, is to meet the company’s rising ambitions.
“One of the things that is true about bootstrapping is that you have to be careful about your money,” he says, “and there are realities about reaching scale that you cannot do. You cannot hire as many employees, and now we need to get more office space in Santa Monica, one of the most expensive rental districts in California.”
Nor do you have as much cash to make acquisitions to expand your business. Today, ZipRecruiter provides a few key services that form the basis of its applicant tracking system — the recruitment term for the platform that manages the jobseeking process:
Businesses are able to post jobs that then get distributed to lots of job boards — more than 50 in all including many of the usual suspects like Indeed.com, Monster.com, Glassdoor and Craigslist, but also those that have been slipping in under the radar as key recruitment grounds like Twitter and Facebook.
After posting, it then offers a single place for the employer to monitor and review candidates from the disparate networks. It also operates as a search engine for the businesses, where they can proactively look for candidates from a database of 4 million+ jobseekers.
On the individual’s side, you can sign up for an email that gives you a daily listing of 25 openings, based on your preferences and using algorithms to find relevant matches. ZipRecruiter says that it scans more than 200 “sources” for these listings. In all, the company counts over 3 million subscribers for the job alert emails, and it sends out 14 million alerts each day. (And for those of you in direct marketing, you know that this alone represents a pretty plum opportunity.)
Siegel says that the funding will also help them expand from the company’s core business, both by building new products and also via acquisition, and for potentially expanding outside of the U.S. The next targets will be to build out more services to help in the “natural lifecycle” post-hiring, for example to manage onboarding, and then payroll, insurance, vacation tracking and more.
This is part of the company’s bigger idea of how jobseeking has been changing over the years, from listings printed in classifieds, to online search engines, to new aggregating powerhouses.
“We are at the end of a change in how job seeking happens,” Siegel says. “How employees advertise for jobs is changing. What we find intriguing are not sites that have a lot of jobseeker traffic, but where employees are congregating to post jobs.” The idea is that if the the good jobs are there, the people will materialise, and also that they can materialise in a large, fragmented way (hence, the 50+ sites where ZipRecruiter lists openings).
Longer term, this could position ZipRecruiter as more of a one-stop, employment and employee services shop, a cloud-based HR assistant. This fits with the company’s remit of providing these services specifically to SMBs of 100 employees or less. Companies of that size may lack the resources to have a large HR staff, but, to be able to compete against larger businesses in the race for talent, having them could come in handy. This is where ZipRecruiter sees itself fitting.
One place where ZipRecruiter does not seem to see itself going, however, is into developing more networking opportunities for its community.
“Please don’t write that we are a LinkedIn killer,” he asks me during our interview. But that does not mean that online recruitment is not an area where both are moving and expanding. LinkedIn’s Talent Solutions is already LinkedIn’s biggest revenue generator, and high on its list for growth opportunities.
“I think LinkedIn is a great service,” Seigel says. “When people talk about social recruiting that is what they do, and we also think it’s great if they do more as a job board too. We would be thrilled if they became a powerhouse there.” But he also points out that, at least for now, they are targeting different parts of the market. “There are 6 million businesses actively hiring and recruiting online in the U.S. right now, but only 1 million of them have over 500 employees,” he continues. “LinkedIn makes the majority of its revenue from that top million, while we target the smaller companies.” In the U.S. alone, there are some 28 million SMBs, investor Eric Liaw from IVP estimates, and collectively they account for employing about half of the whole U.S. workforce.
“Of course, we would welcome customers of any size,” Siegel adds.
ZipRecruiter’s ambitions, and its existing track record, are the two factors that attracted IVP to the company.
“We are excited to lead the first ever funding round at ZipRecruiter,” said Eric Liaw, a Principal at IVP who is also joining the board. “It’s rare you see a business reach the scale, growth and profitability of ZipRecruiter and the company’s success to date is a testament to the entire organization. However, what is most compelling is their commitment to delivering high quality products to their users… We believe the market opportunity for ZipRecruiter is enormous and look forward to helping the company reach its goals.”