is putting a referral spin on tech recruitment

Demand for talent continues to make tech recruitment a hotbed of startup activity. To wit: Madrid-based startup, which is now expanding its “talent sharing platform” — initially focused on tech skills — into the U.K. (opening to in-house tech recruiters in London from today).

It is also revealing $10 million in combined seed and pre-Series A funding as it emerges from stealth. Investors backing the Spanish startup include LocalGlobe, Point Nine and Kibo Ventures.

The 2019-founded recruitment startup may have been operating under the publicity radar but it’s signed up more than 5,500 in-house recruiters to its recommendation-focused community over the past 2.5 years of development, as well as claiming more than 19,000 candidates.

It claims it’s developed a new model for hiring — using a platform approach which encourages companies to recommend tech talent they were unable to hire to Circular’s recruitment network. So far it says this has resulted in “vetted and recommended” candidates converting 10x more than conventional recruitment methods — ergo, the top-line claim is the approach can make it “easier and quicker to find great tech candidates who want to be hired”.

Candidates who sign up to the platform do so confidentially, meaning they open themselves to job opportunities available via the network without needing to commit themselves to a public disclosure or active job searching themselves.

Circular supports tech talent to nail down its next role through a team of what it bills as “talent advocates” — who provide assistance to candidates on locating suitable roles and on getting the initial in-house recruiter recommendation that will increase their chances of being shortlisted by employers hiring through the platform.

Companies signed up to tap into Circular’s referral-focused approach to hiring include FORM3, Echobox, Dow Jones and Busuu, it notes.

“While talent-sharing behaviour is not new and in-house recruiters have been introducing talent they liked but didn’t hire to colleagues or friends in the industry for many years, it’s been informal, unstructured and has happened in low-trust environments, limiting its effectiveness and causing compliance and privacy issues,” argues the startup. “At Circular, we use technology to make this happen at scale by creating trust, reducing friction and offering the right incentives. It’s a new recruitment model built on top of existing recommendation-based behaviour.”

“At scale, this recommendation effect creates efficiency in the industry because companies are already spending time and money attracting and interviewing candidates which they eventually don’t hire. We allow them to recommend this talent to their peers and gain access to other recommended candidates in return,” it adds. “Similarly, candidates are spending time taking part in interviews and code tests — we allow them to leverage that effort in other job opportunities.”

While there has been plenty of startup attention to recruitment in the nearly two decades since LinkedIn busted onto the professional networking scene, Circular dismisses a lot of the activity — as “niche job boards or ‘AI’ sourcing tools that overpromise and underdeliver”.

As a result, it’s leaning into human referrals versus machine-matching — by encouraging in-house recruiters to pool existing effort undertaken in vetting potential candidates which they ended up being unable to hire.

Why should hyper busy in-house recruiters bother doing that? “The main incentive is improving candidate experience,” it suggests. “By recommending strong candidates that they were unable to hire, in-house recruiters can leave candidates with a positive impression of their company despite the rejection.”

Circular’s follow-on claim is it’s therefore creating “a new category” — or “literally changing the way hiring works”.

“Instead of a hard-stop for the great talent that in-house recruiters were unable to hire, we enable them to easily recommend that talent. Other in-house recruiters, who are hiring, get access to a trusted flow of high-quality candidates. And candidates benefit from getting straight to the best companies’ shortlists,” it suggests.

Whether this vetted and curated candidate approach will scale — i.e. without recommendation quality getting diluted in the quest to scale the size of the platform/grow its business — is one question to consider, given how relatively few job seekers (per advertised role) actually get interviewed/thoroughly vetted and also aren’t ultimately hired.

That classic ratio suggests a pretty limited pool of candidates who could be recommended to/through Circular, unless conditions to access its recruitment network are rather less stringent.

And on that front its website FAQ notes work undertaken by Circular “talent advocates” (i.e. on behalf of signed up job seekers) includes “helping you get recommended” — so, clearly, it’s not leaving the size of its recruitment network/scalability of its business purely to the proactive goodwill of in-house recruiters.

It does also confirm to us that it lets candidates “sign up organically”, not only via direct recommendations.

(While, elsewhere on the website, in a section on how the platform works, Circular further writes that candidates can create a profile in less than 3 min and: “Get an optional recommendation from in-house recruiters, colleagues or our team” — so the concept of a recommendation on the platform is demonstrably fairly malleable.)

The startup is also dangling some platform reputation kudos and other incentives to encourage in-house tech recruiters to make the effort to refer talent they don’t hire — touting an incoming rewards program comprised of discounts and giveaways (such as event tickets/merch) for the “most active recommenders in the community”.

“In-house recruiters are getting sick of the ‘battle for talent’,” it also argues. “Tech recruiters know that they’re after the same candidates as everyone else. They know that there’s no advantage in pure competitiveness. And they know that the traditional recruitment model is letting everyone down and leaving candidates with a poor experience and a negative perception of their business. Most of them know it’s better to pool their efforts to find talent and fill roles quickly and painlessly. Their reputation in Circular grows as they refer candidates and help their peers.”

While Circular is zeroing in on tech talent — encouraged by tech companies’ willingness to be early adopters of newfangled tools — it believes its model could work for other industries too.

“From a candidate perspective our model can be replicated across the board,” it argues. “We assign candidates with real-life Talent Advocates to act on their behalf, ensuring they’re on shortlists for the best roles. They provide transparent information, including salary and benefits, keep them in the know, and provide in-depth feedback. And it’s all 100% confidential. We take candidate experience very seriously. Candidates in Circular rate their interview process when they end and poorly rated companies are rejected from the network.”

Its own business model is to charge companies a SaaS-style flat annual or monthly fee for access to its recruitment network, rather than taking a “traditional success fee approach” — arguing the latter is part of what “makes this industry so transactional and cold”.

And while that means employers who sign up have to shell out an ongoing fee, Circular notes that as it opens in a new market it offers customers the “first few months” free — so they can kick the tyres of its referral-based spin on hiring gratis.

As well as (now) London, Circular’s recruitment network is live in Barcelona and Madrid.

Commenting on Circular’s London launch in a supporting statement, Emma Phillips, investment partner at LocalGlobe, said: “While traditional models involve interviewing tens of dozens of potential candidates, with an end result of hiring just one, Circular has changed the game when it comes to the recruitment process — there is no longer a hard stop on the great talent that in-house recruiters were not able to hire themselves. They can now easily recommend these candidates to other recruiters, and in return have access to a talent pool recommended and vetted by their peers. At LocalGlobe, we are huge believers in the power of community and the effects of recommendations and see huge potential when applied to recruitment which is why we’re excited to be supporting Circular on the next phase of its journey.”

Other backers of the startup include All Iron Ventures, Quentin Nickmans (eFounders), Kima and Shilling.

This report was updated with additional information about Circular’s investors.