People TECH Fund II
Introduction and History
The HR TECH Partnership was set up in London in 2016 and has since then been active in investing in People tech start-ups. It has successfully raised Fund I which has already made 2 investments, The PeopleTECH Fund II aims to be a growth specific fund targeting investments into growth stage technology companies that have a viable product or service specifically improving workplace/employee productivity and human capital performance. Data and predictive analytics is a key element of all investments, as there is a firm belief that disrupting traditional people practices and improving workplace productivity will require a more strategic use of technology.
The lead investors in our first fund all have senior level HR experience in the corporate sector and bring a depth of domain expertise and experience in the use of People technologies. Their connections and network give them not just a unique insight into emerging technologies, but also access to specialist, first-in-line deal flow. A natural corollary to this is their ability to access new marketing avenues and customer relationships to cutting edge HR tech products and services of the investee firms.
Many investors from Fund 1 are following on in Fund II as well and this includes amongst others:
Helmut Schuster - Group Human Resources Director, BP
Celia Baxter – Non-Executive Director of Senior plc, Bekaert SA and RHI Magnesita NV, formerly Director of Group HR at Bunzl plc
Paul Raby – Group Human Resources Director, Balfour Beatty
Martin Sawkins – Non- Executive Director Scapa and Wincanton, Investor Director Africa Exclusive and ex Group HRD Rentokil
Jill Shedden – Group Director HR Centrica Plc
Rolf Deusinger – Senior Advisor Miles Partnership
• AI / Big Data / Cloud/ Mobile & Social are rapidly playing a paradigm-shifting role in the HR space.
• We believe that startups and SMEs in this sector are underserved by generalist VC’s. There is a big void between seed and growth stage capital, providing for strong and niche deal flow.
• According to the EY 2016 report, London (and the UK) are acknowledged to have the most vibrant ecosystems for technology start-ups after Silicon Valley.
• We believe that Monolithic HR systems, once a mainstay of large organisations, are no longer fit for purpose. Nimble startups / SMEs with niche products & services are sought after to fill the breach.
Being an investor in the Fund enables you to:
• Invest early in a fast growth sector
• Enables you to create not just financial value but do it along with an “engaging & learning” experience
• Gives you an opportunity to feed into decision making around curation of deals
• Allows you to make investments across a portfolio of chosen start-ups/SMEs along with domain experts and senior decision makers
• Gets you a preferential invitation to special networking events, seminars, and conferences
• Helps you be a driver of incredible change in the HR start-up space
*Read all about the tax benefits that you may be eligible for on the Seedrs blog: http://learn.seedrs.com/guides/uk-tax-relief/. Tax treatment depends on the individual circumstances of each client and may be subject to change in future.
Fund details /Investment Terms
People Tech Fund II is aiming to raise between £400,000 to £1m, and investors are encouraged to invest a minimum of £50,000. The intention is to attract investors who will bring commercial and/or domain expertise in the People Tech space.Equity stake in each deal will be dependent on the funding desired by the investee company and its projected valuation.
The funds raised pursuant to this campaign will be held in escrow by Seedrs until deployed into investee entities. The People Tech Fund II team will then identify eligible start-ups based on the criteria below and introduce them to Seedrs to run a crowdfunding campaign.
Your funds will be invested further via the crowdfunding campaign on Seedrs. It is expected that the People Tech Fund II will be deployed across three investee companies, over a period of 9 to 12 months.
If the potential investee company is successful in its fundraise on Seedrs:
• Seedrs as nominee, will perform legal due diligence and then invest your funds directly into the chosen business in exchange for equity.
• Seedrs will hold these shares as your nominee (in the same way it does for investors who invest directly into equity fundraise campaigns on Seedrs).
If the potential investee company is not successful in hitting its target on Seedrs, no funds will be invested. The valuation that investments are made at will be the same for all investors.
All funds raised via this Campaign will be invested into investee entities (and can potentially benefit from EIS/SEIS relief*).
Upfront fees are charged to the investee companies. Each investee company will be charged a fee upon investment as follows:
• In relation to funds deployed from the HR TECH Fund, a fee of £12,000 plus VAT (40% of this fee will be paid to the HR Tech Fund team, 60% to Seedrs)
• In relation to other funds raised via the investee entity’s crowdfunding campaign on Seedrs, Seedrs standard fees will apply.
HR Tech Partnership Fees for investors:
• Investors are charged a one-time administration fee of £2,000 payable to the HR TECH Partnership.
• HR TECH Partnership will charge 12.5% on any profits made by the investors on their investment on a deal-by-deal basis.
Seedrs Fees for investors:
• Seedrs will charge its standard 7.5% carry fee on any profits made by investors on their investment on a deal-by-deal basis, in accordance with the investment agreement. More information on Seedrs fee can be found here: https://www.seedrs.com/learn/guides/after-you-i....
*tax relief is dependent on individual circumstances and subject to change.
As FinTech leads the way, we believe PeopleTech is becoming a prominent sector and one we believe investors should be focusing on. We define the People tech category broadly to include technology solutions around Recruitment, Workforce management, Talent & Learning, Leadership & Team Development, Employee Engagement & Wellness, Benefits & Mobility administration and Culture/ Behaviours in organisations.
Annual Financing History.
According to CB Insights, deal activity in HR tech has grown consistently in the last 5 years and 2016 saw over 8.6% more deals than 2015. Funding has also increased especially since 2014.
Although the number of HR deals annually has more than doubled since 2012, the distribution of investment stages has remained relatively static. Since 2012, roughly two-thirds of deals in the category are in early-stage deals (seed/angel and Series A).
We believe the ecosystem is ripe for start-ups to scale and eventually exit.
Our Focus Areas for People Tech start-ups / SMEs
- Post Seed and pre-Series A.
- UK domiciled businesses entitled to EIS/SEIS tax benefits.
- B2B enterprise sales catering to corporates.
- Product/Service solving a real ‘pain point’ where the benefits can be quantified in £’s.
- Fits one of our ‘mega trend’ themes:
• Talent / Skills marketplaces – enabling efficient and transparent access to skills on demand. Big data to match talent with careers/roles/organisations.
• Engagement and Development of the workforce – Assessment, Leadership, Coaching/ Mentoring, Feedback & Talent Development.
• Recruitment, Reward & Recognition for the Millennial population.
• Compliance management through desired Culture & Behaviours.
• Gig Economy.
• Has a source of defendable IP (product IP, data, customer lock-in etc).
• Targeted to dominate a niche, but could easily be scaled into other subsectors/geographies with limited investment.
• Team strength first, business second.
The HR TECH Partnership will leverage the established network to help source start-ups. We already have relationships with many of the industry’s incubators, earlier stage accelerators, and venture capitalists within the UK ecosystem. Our unique proposition a high level of visibility for us in this space.
Investment Decision Making Process
When evaluating opportunities, we reference the following criteria as guidelines:
- All investors will have an opportunity to meet potential investee teams.
- A regular series of monthly calls/ meetings will keep them abreast of start-ups considered but not taken forward. The Managing Partner of HR TECH Partnership will choose deals to refer to Seedrs. The company will need to be successful in its fundraising campaign on Seedrs and pass the Seedrs legal due diligence in order for the investment to be completed.
The previous Fund (Fund 1) has invested in 2 investments over a 12 month period.
Rotageek is a SaaS company that creates data-driven employee schedules. Using AI and Machine Learning, Rotageek creates tools that empower anyone interacting with staff planning – including employees, managers and head office.
Rotageek is planning to raise £1.7m in advanced subscription and the company is looking to close a qualifying round of £1.5m in the next three months.
Since this funding, Rotageek has seen a fivefold increase in client numbers. Rotageek saw a four-fold growth in 2016, and 530% end-user growth in Q1 2017. The team is now made up of 23 members.
Motivii is a smart feedback platform that simplifies great management.
At Motivii smart tools are developed that enable everyone to manage themselves and their team in a simpler and more effective way. This saves time, boosts performance and helps improve retention. Motivii offers everyone - from employee to senior management- real time data on how they and their team are doing at work.
Motivii's last raise was in July 2017. Motivii has raised three seed rounds over the past two years and they are backed by 36 impressive angel investors. Their board is made of five senior leaders and spans finance, media, technology and entertainment backgrounds.
The People TECH Fund II aims to select investee companies that can achieve some form of exit within 6 years. Investments are into private, non-liquid shares, so any disposal is dependent on an exit or liquidity event for the relevant Investee Company.
The Managing Partner, Devyani Vaishampayan, has been in Global HR leadership roles in multinationals and comes with excellent credentials in the HR ecoSystem. A thought leader, Devyani has also been involved earlier in growing an India based Fund, that has had one successful exit.
All investors are senior well- known Business/ HR domain leaders which will facilitate instant acceptance of product/service from potential customers.
Involvement with portfolio companies
All investors will have an opportunity to attend private events and interact with proposed investee companies. Investors may in specific cases act as Mentor/Coach/Board members and add value to any investee company through their network.