“HR Tech in France: Consolidation started in 2022 set to pick up” (In Extenso Finance)

By Philippe Guerrier | The

| sir saas

16 HR Tech Startups raised €1.3 billion, according to the In Extenso Innovation Growth Barometer and ESSEC Business School. Review of 2022 and 2023 outlook with Christophe Del Toso, Managing Partner, Head of M&A activities in IT, digital and technology, at Extenso Finance.



Focus HR Tech with Christophe Del Toso (M&A activities in IT, Digital & Tech, In Extenso Finance) – © DR

2022 was a busy year in terms of funding for HR Tech start-up in France. But emulation runs the risk of falling in 2023 against a backdrop of growing global difficulties: Russian-Ukrainian conflict, energy crisis, inflation, etc.

According Fundraising barometer In Extenso Innovation Croissance and ESSEC Business SchoolFrench technology raised an accumulated amount of 13.6 billion euros, surpassing the level of 2021 (11 billion euros). What is HR Tech’s contribution to this effervescence observed in 2022 and what to expect in 2023?

The analysis of Christopher Del TosoManaging Partner, Head of M&A activities in IT, Digital & Tech, at Extenso Finance.

From the perspective of the In Extenso Innovation Croissance/ESSEC Fundraising Barometer 2022, what is your assessment of funding for HR Tech start-ups in France?

The HR tech segment was well endowed in 2022, although we feel a slowdown in the second half in line with the deterioration of the economic situation observed in the United States. However, HR tech start-ups raised more than substantial funds in 2022: 16 of them raised in France a total value of more than 1.3 billion euros. This represents an increase of 109% compared to 2021! Some operations involve several hundred million euros in HR Tech.

France is ahead of other European countries in this area: we are first in number of operations, but the United Kingdom surpasses us in volume.

Significant fundraisers include:

  • Qonto (bank accounts for SMEs) with 486 million euros;
  • Ecovadis (CSR assessment platform) with 454 million euros;
  • Payfit (payroll software) with 254 million euros;
  • HR Path (publisher and integrator of HR solutions) with 225 million euros;
  • Alan (complementary health) with 186 million euros.

The list drawn up for the In Extenso Innovation Croissance/ESSEC fundraising barometer is not exhaustive, but allows you to distinguish the main trends in start-up funding.

Seen from another angle, 7 HR Tech startups appear in the French Tech Next 40 ranking and 4 have unicorn status.

We should consider the development of start-ups in this segment as confirmation of the digitization of the HR function: managing payroll, vacations, expense reporting and employee benefits.

These tools have links with accounting and legal services, as can be seen in publishers in the Regtech or Legaltech segment such as Septeo, aimed at legal, real estate and business professionals (HR, legal and accounting departments) and which recently multiplied external operations of growth (13 between 2020 and 2022).


HR Technology Trends: Europe and France (2022 In Extenso Innovation Growth Fundraising Barometer) - © DR

HR Technology Trends: Europe and France (2022 In Extenso Innovation Growth Fundraising Barometer) – © DR

What are the prospects for HR Tech in 2023?

It is a recurring phenomenon: startups always appear with new HR services. But at the same time, the movement that started in 2022 towards consolidation in HR Tech start-ups should increase in 2023. This trend affects all software publishers, all positions combined. The significant fundraising carried out will be used to make acquisitions to accelerate its development.

The volume of funding for start-ups may decline in 2023. On the other hand, the M&A market is buzzing with build-ups, driven by the investment funds behind them. We saw this with Swile, which took over Bimpli (BPCE Group) in the employee benefits management platform segment. One gets the impression that it is the little thumb overloaded with venture capital (Swile) and with a smaller turnover that buys an established competitor in the market (Bimpli). This allows him to reach profitability much faster. This creates bubble shapes.

Start-ups seek to pass the scale-up phase with a level of income sufficient to attract the attention of venture capitalists, corresponding to the bar of 100,000 euros of monthly recurring income (Monthly Recurring Revenue or MRR in English).

After the seed phase supported by Bpifrance and French institutional funds, progress is more important for the following funding rounds with VC players with more demanding criteria, namely in terms of income. Screening in the search for investments becomes more selective.

Do you see French HR Tech start-ups opening up to other European markets?

It remains essentially a Franco-French market, but is linked to markets with specific regulations per country. This may be enough in terms of market size, because there are still many French companies that are not yet equipped or sufficiently equipped with digital HR management tools.


Number of HR Tech operations between France and Europe (2022 In Extenso Innovation Growth fundraising barometer) - © In Extenso

Number of HR Tech operations between France and Europe (2022 In Extenso Innovation Growth fundraising barometer) – © In Extenso

Visit to CES: desperately looking for HR Tech

• “ Don’t look for the term HR Tech in the list of topics discussed this year at CES and the start-ups present there are none. » For the 2023 edition, which took place in Las Vegas from January 5th to 8th, Christophe Del Toso and Benoît Rivollet, Managing Partner, Head of innovation & technology, In Extenso Innovation, made the trip to accompany the delegation of 200 start-ups – ups from French Tec. They landed in Nevada’s casino city to conduct a technological watch on “the great mass of global innovation.”
• The HR Tech segment seems to have been conspicuous by its absence, at least in the French Tech community. “CES primarily brings together software or hardware publishers who develop solutions or consumer products for the general public. Difficult to find work-related innovations. We talk more about people’s health on a daily basis than about QWL”according to the two In Extenso ambassadors.

Consult the fundraising barometer In Extenso Innovation Croissance and ESSEC Business School – Year 2022 summary.

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