Disclaimer All research on startup and the whole investment memo has been done for personal use of Akim Arhipov. General overview
RecrutiLab - Recruitment marketing ATS with visual pipelines and video recruitment tools
- easy collaboration with hiring managers
- software adapts to your recruitment process per role
- accelerate the hiring process with asynchronous video interviews
- easy to use + control
Addressable Global Market:
There are about 10m (and growing) recruiters worldwide, RecruitLab is aiming to address - 100k recruiters in 7 years of operations. Below you can see some actual numbers of the market size RecruitLab is tapping into:
- HR Software Market size was valued atĀ $ 15.59 billion to $24.04 billion in 2021 and is projected to surpass $33 Billion by 2028, growing at a CAGR of 10.10% from 2021 to 2028.
- Applicant Tracking System (ATS) Market is estimated to be $2.3 billion in 2021 Ā and reach $3.2 billion by 2026 worldwide.[1] 90%Ā of Fortune 500 Companies are using ATS software to bring the talent to their companies.[2] The demand for the recruitment solutions is growing quickly among small to midsize companies as well where currently only 40-50% of the companies have ATS solutions.
Problem
- āOld schoolāĀ way of reaching the candidate is perfectly explained in theĀ āPost and PrayāĀ term. Hence, recruiters areĀ listing jobsĀ on resources and areĀ waiting to hear backĀ from the candidate. Flow is time-consuming andĀ inefficient.
- Traditional job boards donāt return suitable candidates. Thatās why the number of applicant sources is increasing. And together with the latter the need for a single place where to collect and manage all candidates from different sources, because:
- Around 90% of applicants are unqualified for the position they apply.
- Applicants are waiting for the feedback. The missing feedback is the biggest threat for the employer brand. Recruiter ghosting is made public quickly and itās damaging also for the recruiterās personal brand.
- Job advertising on social media is difficult for recruiters because they need decent landing pages for that and thereās a need to buy ads from social media. Ad management tools in FB and Linkedin are time-consuming to learn and deploy.
- Fragmented and complicated recruitment tools make HR work difficult and inefficient for employers that are regularly hiring.
- Large enterprise segment (>1000 employees) dominated the market with 63.8% of the market in 2019. The enterprise ATS solutions such as those by Oracle and SAP are very expensive, and the cost of this software is generally prohibitive for companies with less than 500 employees. Among large organizations, the top perceived barriers to adoption (cited by 60%) is that āleadership will not commit to an investment in ATS.ā
- Similarly, for SMEās the top reason (46%) for not adopting an ATS platform is ācost.ā However, due to the popularity of cloud-based solutions from new entrants on the market with their cost efficiency and accessibility, adoption of recruiting software by small and medium-sized enterprises is starting to increase dramatically.
- According to the statistics,Ā only 15%Ā of available candidates on the market areĀ actively searchingĀ for a new opportunity. TheĀ remaining 85%Ā are passive,Ā waiting to be approached.
- In addition, recruiters have toĀ manage different channelsĀ separately; henceĀ workload is always only growing. There is aĀ lack of automationĀ within the field, and recruitersĀ live under stress.
Solution
RecruitLab is a platform to manage the full recruitment cycle with built-in recruitment marketing tools, recruitment automations, interview scheduler, and video recruitment tools, to cut recruiters work by 70% while increasing top talent acquisition.
RecruitLab is all in one, no code marketing and recruitment tool. Product has a lot of similarities with Pipedrive but is designed for recruitment, offering 3-layered view to go deeper and deeper within the pipeline. There are:
- General view as the overview layer of your projects/positions you look for
- Pipeline view, where user can go deeper and check what is the current status per position they are looking for.
- Candidate view, where user can dive deeper into details of the candidate, one could check all the asynchronous interviews, tasks, etc.
On top to the previous section:
- Candidatesā talent pool, with direct marketing tools and GDPR automation.
- Recruitment LP tool (visual editor, no designer or developer skills needed)
- Career page builder (visual editor, no designer or developer skills needed)
- Customisable application formsā tool
- Interview scheduler
- Automated recruitment funnels (recruiters are able to customize by themselves)
- Asynchronous video interviews, live video interviews
- Collaboration tools for recruiters and hiring managers
- Job board integrations
Target audience:
Below I am listing different groups, which all fall into the target audience group:
- Recruiters, hiring for a high volume roles like sales-, service, assisting, marketing, junior roles, where there is usually need to create an inbound flow of candidates through job posting, recruitment marketing and there are usually many applicants per role. (Examples of perfect customers; KPMG, DPD, Tallink, Rademar, Circle K, Upsteam, Lindstrom, etc)
- Recruiters, hiring for many different roles. (Examples: Tallink, small recruitment agencies (2-10 employees) or freelance recruiters with more than 20 placements a year)
Marketing
Marketing is being divided into three segments:
- Profile webinars, through which then gather target audience and, and convert from there. (40% of the MRR)
- Inbound leads (35% of the MRR) through:
- Paid ads
- Organic inbound + others
- Referrals + Email sequence (25% of the MRR)
CAC: 2000ā¬ (YTD April ā22)
LTV: ā¬ 12400 (YTD April 22)
CAC payback period: <1 year
Unit economy + Business
Price: Product is being sold at 59ā¬ per monthly user, price is rather matching the competition. Of course, there are some exemptions:
For bigger teams RecruitLab is creating a custom offers, for example, biggest clients are paying 700ā¬ monthly. (UK based client)
Sales Cycle: Being calculated from the first contact - first invoice sent out. It is different per customer segment :
- Recruitment agencies - 45 days (median)
- Employers - 60 days (median)
MRR - 15k ā¬
Burn rate - 12k ā¬
Runway - until November 2022
*Please note, PnL + Projection table may be obtain upon the request
ProductĀ
Currently:
The product alsoĀ allows various features, which help the recruiter use it as an all-in-one solution; there isĀ no need to use external software. All can be done without leaving RecrutiLab. In addition,Ā recruiters may automate the process within the pipeline, so a lot of time can be saved. Finally, recruitersĀ can set āif-this-then-thatā rules and let the product assist them. From the features, I would highlight:
- Recruitment Marketing
- Video interview moduleĀ (live and asynchronous)
- Collaboration tools (for within recruitment team and for collaboration with hiring managers or clients (agencies))
- Landing page creatorĀ (ahead of the competition as it is simple and efficient LP can be created with no code, easily)
- Interview scheduler
- Recruitment intelligenceĀ (In the making, RecruitLab gathers a lot of data, which will be turned into actionable insights for recruiters (recruitersā performance tools)
- AI element - it does not sort for the recruiters, but it tracks the pattern of the recruiters and helps to prioritise according to the relevance, based on the behavioural patterns in previous searches of the same recruiter within a similar position
- Integrations with applicant sources and HR software
In Development + Future:
- All the product has been built so far by 1 full time developer and some outsourced bites of UX. Product doesnāt have any major technical debt, but has a lot of corners to polish from UX point of view to increase NPS, NRR and to optimize time spent on customer support.
- Recruiter performance tools (actionable insights)
- Keep building integrations with external applicantsās sources and HRIS-s
- Pre-selection AI
H1 / H2 / H3 /H4 are Quarters after the fundraise is done.
Operations from here on
There are 2 main parts, which will be addressed as a priority after this round is closed:
- Recruitment:
- Add people to the marketing team (3)
- Add people to the sales team (3, step by step according to the trends in growth and inbound leads)
- Add a customer success manager (1 can handle up to 100 clients)
- Expand the development team (2 full time + UX-dev outsourced half time)
- New Markets:
- Priority is the UK
- Lithuania (partly validated as well), and other small, non English speaking countries to follow
Validations
Launched in: 12.03.2020, Recruitment Software OĆ
Key Metrics:
- MRR
- Nr of demos + conversion (helps to understand if product is still needed and is on the right track)
MRR: ca.15kā¬
Number of customers: 77 companies / 500 + users
Paying customers: 77 companies / 500 + users
Investments so far
Stage: Pre-Seed
Amount: 300k
Investors so far:
- Superangel
- Peep Vain
- Timo Peep
- Urmas Purde
Total amount raised until today: 300k ā¬
*Cap Table:
*More detailed Cap table can be seen upon the request
Team
Short Background:
- Paavo and Marie met at CV Keskus, further opened up their own recruitment agency. They have great synergy and Marie have covered for Paavo seamlessly at times, when Paavo had to put focus elsewhere. Great, reliable professional relationship.
- Paavo met Karl-Sander, while launching Kinnisvara24 portal, where Paavo was head of project and Karl-Sander serving as a Tech Lead. Throughout the years, they managed to avoid any kind of conflicts, holding solid professional relationship.
- All founders are dedicated full time, average gross salary 3330ā¬ BRUTO, this will be raised by 33% after the seed round.
Competitors
Country: SE Raised: 16m USD to date Product: Teamtailor is developing an employer branding platform. They help SMEs market themselves as an attractive workplace, engage their employees and improve their recruiting process. All in one easy-to-use web service. Customers: Undisclosed Growth: Undisclosed
Country: US Raised: 84.2 USD to date Product: Workable is the worldās leading hiring platform. We provide in-house recruiters and hiring teams with more ways to find more qualified candidates, and help them work together to identify and hire the best. Companies who use our software get from requisition to offer letter faster, with automated and AI-powered tools that source and suggest candidates, simplify decision making and streamline the hiring process. Customers: Undisclosed Growth: Undisclosed
Country: NL Raised: Undisclosed Product: Recruitee is the collaborative hiring software that delivers the complete solution to help internal HR teams work with the rest of their organization to hire better together. Customers: Undisclosed Growth: Undisclosed
Country: US Raised: Undisclosed Product: Recruit CRM helps recruiters manage all their work on one simple platform. We take care of all the repetitive work and help recruiters do what they do best: Fill positions. When you need to schedule interviews, set reminders, get an updated resume or collect feedback from interviewers, Recruit CRM has you covered. Customers: Undisclosed Growth: Undisclosed
Round information
General Ask: 2m ā¬ new cash-in via Equity
Commitments so far, amount: 1,5m ā¬ (Change Ventures (Yrjƶ Ojasaar leading this round)
Investment instrument: Equity
Pre-money valuation: 8m ā¬
Round closing deadline: 30.06.22
Pitch Deck:
Upon Request available: Detailed Cap Table / Costs and Revenue + forecast / Product Development Roadmap
Finally, Reference
- Some feedback from client interviews, done by Yrjƶ Ojasaar (Change VC), who are also joining, and leading this round: