HR Technology & Saas Product India Industry

Indian HR Tech ecosystem

1. Blume Ventures | Fall 2023 Future of HRTech From India for the World

2. Index HRMS : Human Resource Management Software HCM : Human Capital Management HRIS : Human Resource Information System HRBP : Human Resource Business Partner DEI : Diversity, Equity, Inclusion ESG : Environment, Social, Governance F&F : Full & Final Settlement 1 2 3 4 5 6 7 9 LMS : Learning Management System 10 ICP : Ideal Customer Persona 8 ATS : Applicant Tracking System 1 1 JTBD : Jobs To Be Done 12 ACV : Annual Contract Value 13 LTV : Lifetime Value 14 FTE : Full Time Employee ‹#›

3. Blume Ventures & Our HRTech Investments Blume Ventures is amongst India’s leading early stage venture funds, investing in tech-led ventures across sectors. We are presently investing out of our US $290M Fund IV. We are sector agnostic investors and typically invest in companies through Seed to Series A stages with a preference to come in early. While we are thesis driven, we are also open to questioning and changing our views as we learn from founders and the market. If you have any feedback on this thesis, or would like to push back on any view, please reach out! HRTech Team at Blume Sajith Pai Partner | New Delhi [email protected] Radhika Agarwal Associate | Bengaluru [email protected] Nachammai Savithiri Analyst | New Delhi [email protected] Notable Investments Key HRTech Investments ‹#›

4. HRTech has seen some fundamental changes in the last decade💡 Expansion of the HR Function Increase in HRTech Spend Disruption in Technology Changes in Ways of Working Empowering of HR Leaders Changing HR Priorities HRTech spend is growing at a CAGR of 7-8% y-o-y with the global HRTech market size poised to grow from $24B in 2022 to $47B by 2030 .* With the influx of AI, VR/AR technologies and capabilities, the HR function is bound to be disrupted by virtual assistants, workflow automation tools, talent upskilling and reskilling. As workplaces adopt hybrid policies, 4-day work weeks, ESG⁽⁶⁾, DEI⁽⁵⁾ , workflow automation, and focus on employer branding, several new opportunities arise Increasingly, HR is becoming an autonomous function and in most organizations, the CHRO is an empowered decision maker with control over key decisions . HR priorities have shifted from people management and hiring to people development, engagement, retention, and welfare. The mandate of the HR Function has expanded and evolved over the years with HR winning a seat at the table and becoming a key strategic partner to C-suite leadership and organizations. *Source : Economic Times ‹#›

5. The HR function has evolved over the last 4 decades 🚀 Good to have Must have In the post-war years, the role of HR was limited to that of a negotiator , compliance manager , and industrial relations officer who managed and kept labour unions at bay. The 1980s saw a boost in M&A and the HR focus was shifted to change management , team building and workforce planning. HRTech: Payroll, Time & Attendance Management Primary function of the HR becomes talent management from hire to retire. As the workforce booms, employability and skilling become the primary focus. HRTech: Job Boards, ATS⁽⁸⁾, HRMS⁽¹⁾ , L&D are added to the tech stack HR is a strategic business partner with a seat at the table. As labour markets become more competitive, employee attraction & retention are the focus with companies offering competitive pay , benefits. Gig work platforms create additional work opportunities. HRTech: Performance Management , Talent Assessment, Rewards & Benefits, Gig Work, Mobility Solutions In the post pandemic years, as organisations move towards distributed and hybrid workforces, HR is a digital transformation champion . Employee engagement, cross-border legal and compliance, are core problems to solve for. Benefits shift to qualitative rather than quantitative benefits eg: hybrid work policies, health care, wellness budgets. HRTech: HRMS for Remote Work, Wellness Platforms for Mental and Physical Wellbeing, Collaboration & Communication Tools, Productivity & Knowledge Management Tools Expendable HR as a Priority 1980 200 2010 Post Pandemic ‹#›

6. India-built HRTech startups have become global businesses 💪 India’s HRTech B2B SaaS proves its mettle by delivering world class products and global Go-To-Market (GTM) playbooks Source: Business Today Tailwinds for Building in India for the Globe: i) Reverse migration of operators harnessing the country's talented workforce and lower build costs, along with their knowledge of global markets and understanding of customers, have resulted in robust products made in India for the World. ii) India’s global GTM playbook is ripe for the taking with Indian SaaS players keeping pace with the growth of US counterparts. iii) There is a large whitespace and need for low-cost tools. iv) HRTech Tools, in general, make for great cross-border products because (funnily enough) it is essentially 100% software with limited human intervention. ‹#›

7. Based on our understanding of the HRTech function and needs of employers, we sketched out how we visualize 📌 Blume’s HRTech Matrix

8. This is how we visualize the overall market 🔍 Persona Employee Lifecycle Hiring Process Tenure Offboarding Individual [B2C] Upskilling + Signaling [Career education platforms and portfolio showcasing tools] Job Discovery + Networking [Job boards, communities, networking and mentorship] Employer [B2B] Employer Branding [Signaling culture and benefits to candidates] Knowledge Systems & Productivity Tools [Collaboration tools, internal databases, efficiency enhancing tools] Talent Planning & Discovery [Candidate Sourcing and ATS] Admin & Workforce Planning [Time & Attendance, Workforce Planning, Mobility Solutions, Talent Management, Analytics etc.] Exit Management [Exit Interviews, F&F⁽⁷⁾] Assessments [Interview and Assessment tools] Training & Coaching [LMS⁽⁹⁾, New Hire Training, Coaching, Employee Skilling] Contracts & Ref Checks [Contract Management and Background Checks] Performance Management. Rewards & Recognition [Incentive Management, Performance Tracking Tools] Alumni Services [Alumni community, referrals, employer branding] Onboarding [New Employee Onboarding and Compliance] Payroll & Finance [Payroll, CompBen, Compliance] Benefits + Culture [Employee Communities, Corporate Retreats & Events, Health & Wellness Benefits] ‹#›

9. This is how we visualize the overall market 🔍 Persona Employee Lifecycle Hiring Process Tenure Offboarding Individual [B2C] Upskilling + Signaling Job Discovery + Networking Employer [B2B] Employer Branding Knowledge Systems & Productivity Tools Talent Planning & Discovery Admin & Workforce Planning Exit Management Assessments Training & Coaching Contracts & Ref Checks Performance Man agement, Rewards & Recognition Alumni Services Onboarding Payroll & Finance Benefits + Culture At Blume, we think of all candidate services (upskilling + job discovery) as ‘edtech’. For our view on these spaces, please see our edtech thesis here . ‹#›

10. So, let’s simplify the matrix to just ‘ HRTech ’

11. This is how we visualize the market: Our HRTech Matrix 📌 Employee Lifecycle Hiring Process Tenure Offboarding Employer Branding Knowledge Systems & Productivity Tools Talent Planning & Discovery Admin & Workforce Planning Exit Management Assessments Training & Coaching Contracts & Ref Checks Performance Ma nagement, Rewards & Recognition Alumni Services Onboarding Payroll & Finance Benefits + Culture ‹#›

12. Large global and Indian players exist across most sub-spaces 🤯 Employee Lifecycle Hiring Process Tenure Offboarding Employer Branding Knowledge Systems & Productivity Tools Talent Planning & Discovery Admin & Workforce Planning Exit Management Assessments Training & Coaching Contracts & Ref Checks Performance Management, Rewards & Recognition Alumni Services Onboarding Payroll & Finance Benefits + Culture ‹#›

13. To narrow down which sub-spaces are investable opportunities, we studied: ✓ Total Addressable Market ✓ Typical ICP for the Product ✓ Priority Stack of HRs / CEOs ✓ Available Whitespaces & Wedges

14. Let’s start with TAM🔥

15. TAM: HCM & HRMS Estimated size of the global HCM/ HRMS market by 2030* Employee Lifecycle Hiring Process Tenure Offboarding Employer Branding Knowledge Systems & Productivity Tools Talent Planning & Discovery [Candidate Sourcing and ATS] Admin & Workforce Planning [Collaboration tools, internal databases, efficiency enhancing tools] Exit Management [Exit Interviews, F&F] Assessments Training & Coaching [LMS, New Hire Training, Coaching, Employee Skilling] Contracts & Ref Checks Performance Management, Rewards & Recognition [Incentive Management, Performance Tracking Tools] Alumni Services Onboarding [New Employee Onboarding and Compliance] Payroll & Finance [Payroll, CompBen, Compliance] Benefits + Culture [Employee Communities, Corporate Retreats & Events, Health & Wellness Benefits] *Source: Fortune Business Insights, Deloitte Report While most highlighted buckets like payroll, b enefits, performance management have sufficient standalone demand, players in this space eventually build out the full-suite, as each of these buckets are highly interconnected and powerful in conjunction to one another. HRMS suites, also known by HCM⁽²⁾/ HRIS⁽¹³⁾, are the primary repository of data and information in an organization. ~$50B ‹#›

16. TAM: L&D Estimated size of the g lobal Corporate Training Market by 2030* Employee Lifecycle Hiring Process Tenure Offboarding Employer Branding Knowledge Systems & Productivity Tools Talent Planning & Discovery Admin & Workforce Planning Exit Management Assessments Training & Coaching [LMS, New Hire Training, Coaching, Employee Skilling] Contracts & Ref Checks Performance Management, Rewards & Recognition Alumni Services Onboarding [New Employee Onboarding and Compliance] Payroll & Finance Benefits + Culture *Source: BusinessWire Corporate training includes technical training, new hire training, compliance training, LMS, management coaching, upskilling & reskilling. Much of this market is on-site and instructor-led and therefore operates in an agency or services model. However as blended and hybrid ways of working come into play there is significant opportunity to be captured by harnessing tech. On-site training however is preferred for high priority areas like leadership coaching. ~ $480B ‹#›

17. TAM: Online Recruitment Estimated size of the global Online Recruitment market by 2030* *Source: Research And Markets The Global Recruitment & Staffing market presents ~$500B opportunity by 2028 per Globe Newswire. This is a highly fragmented market with many agency-led models. About $100B of this market is served by online recruitment platforms. This includes the assessment and interview tools market which is a $5.64B opportunity. Employee Lifecycle Hiring Process Tenure Offboarding Employer Branding Knowledge Systems & Productivity Tools Talent Planning & Discovery [Candidate Sourcing and ATS] Admin & Workforce Planning Exit Management Assessments [Interview and Assessment tools] Training & Coaching Contracts & Ref Checks [Contract Management and Background Checks] Performance Management, Rewards & Recognition Alumni Services Onboarding [New Employee Onboarding and Compliance] Payroll & Finance Benefits + Culture ~ $100B ‹#›

18. TAM: Productivity & Tools Estimated Productivity Tools market size by 2030* *Source: Acumen Research & Consulting Productivity Tools and Knowledge Management Systems are key to employee engagement and boosting efficiency. Here we consider collaboration tools, communication platforms, employee support tools, and content management systems. This space is seeing many new and exciting entrants with the rise of GenAI and no code platforms that help build internal tools to enhance workflows and efficiency. Employee Lifecycle Hiring Process Tenure Offboarding Employer Branding Knowledge Systems & Productivity Tools [Collaboration tools, internal databases, efficiency enhancing tools] Talent Planning & Discovery Admin & Workforce Planning Alumni Services Assessments Training & Coaching Contracts & Ref Checks Performance Management, Rewards & Recognition Exit Interviews, F&F Onboarding Payroll & Finance Benefits + Culture ~ $150B ‹#›

19. TAM: Benefits & Wellness Estimated Employee Benefits and Wellness space by 2032* *Source: Globe Newswire, Mint The Employee Benefits and Wellness market has been growing in recent times, especially post pandemic. This space is also seeing regulation push driving employers to provide financial benefits, health benefits, alternate ways of working like the 4 day workweek, hybrid work etc. In India the Corporate Wellness Market is a INR 23,000 Cr opportunity and Corporate Health Insurance is another INR 31,000 Cr opportunity Employee Lifecycle Hiring Process Tenure Offboarding Employer Branding Knowledge Systems & Productivity Tools Talent Planning & Discovery Admin & Workforce Planning Exit Management Assessments Training & Coaching Contracts & Ref Checks Performance Management, Rewards & Recognition Alumni Services Onboarding Payroll & Finance Benefits + Culture [Employee Communities, Corporate Retreats & Events, Health & Wellness Benefits] ~ $100B ‹#›

20. TAM: Employer Branding The Employer Branding and EVP market is still evolving, and becoming larger as a result of competitive talent markets → TAM is yet to be determined Employer Branding or EVP (Employee Value Proposition) strategies are increasingly being adopted by companies to attract and retain the best-in-class talent. This space is heavily dominated by social media platforms, career communities and networks. Many organizations are also building internal talent marketplaces and communities to engage, attract and retain their talent. Employee Lifecycle Hiring Process Tenure Offboarding Employer Branding [Signaling culture and benefits to candidates] Knowledge Systems & Productivity Tools Talent Planning & Discovery Admin & Workforce Planning Exit Management Assessments Training & Coaching Contracts & Ref Checks Performance Management, Rewards & Recognition Alumni Services [Alumni community, referrals, employer branding] Onboarding Payroll & Finance Benefits + Culture 🤔 ‹#›

21. Let’s understand what is a must -have vs a good-to -have product for teams🕵️‍♀️

22. HR needs grow as the organization grows 📈 Small Orgs <250 FTEs Mid-Size Orgs 250-1k FTEs Large Orgs >1k FTEs Payroll System of Records ATS Job Board Admin Tools Productivity Tools HRMS Performance Management LMS, L&D Employer Branding & Culture Benefits Alumni Services What remains core and indispensable to organizations irrespective of size is Payroll, Recruitment & Systems of Records. During budget cuts, these areas are the first to go or be downsized Priority Level (Basis HR Surveys and Interviews) ‹#›

23. We spoke to CHROs to understand their priority areas ⚖️ Must Have Good to Have Low Priority Employee Lifecycle Hiring Process Tenure Offboarding Employer Branding Knowledge Systems & Productivity Tools Talent Planning & Discovery Admin & Workforce Planning Exit Management Assessments Training & Coaching Contracts & Ref Checks Performance Management Alumni Services Onboarding Payroll & Finance Benefits + Culture ‹#›

24. Let’s look at the ICP (Ideal Customer Persona) for each sub-space🤝

25. The relative influence of the ICP within the org is key The ICP that the company is selling to is key because it impacts: Budget that the spend is coming out of Speed of decision making Number of decision makers (or deal breakers) Depending on the organization, different stakeholders have different levels of power. Here are some of our learnings from speaking with HRtech founders: CROs (Chief Revenue Officer) or any Head of Sales / Revenue Growth are powerful ICPs because they typically have very high budget approvals and are authorized to make decisions quickly and autonomously. For larger corporates, ‘Head of Human Resources’ is typically able to get faster (and higher budget ) approvals than the Head of Talent Acquisition or Head of L&D. Different organizations empower stakeholders and teams differently. Some organizations give their HR leaders a lot more autonomy, while others see them as second to revenue driving teams. Rapidly scaling organizations typically give their Head of Talent Acquisition a lot more autonomy and budget than larger corporates that scale their teams more slowly (or have very structured hiring processes). ‹#›

26. Sanctioner Influencer Primary Use r Depending on the JTBD * , HRTech companies sell to different ICPs Small (0-250 FTEs⁽¹⁴⁾) Mid Size (250-1000 FTEs) Large (1000+ FTEs) C-Suite IT, Head of HR, Head of Recruitment HRIS / IT, Employees HRIS / IT, HR Team, Employees Head of HR, Chief of Staff, Head of Recruitment, HRIS / IT CHRO, HRBP⁽⁴⁾, Functional Head, CFO Head of Recruitment, Head of Talent Management, Head of L&D, Benefits Administrator, Functional Heads, Procurement Team, CFO HRBP, HRIS / IT, HR Team IT, Employees C-Suite and Budgets typically dictate HRTech spend in small organisations. Main HRTech buys include ATS, Payroll and Job Boards. Mid-Size Orgs typically bring on a CHRO to take over nascent HR Operations and build out a culture and robust function. Here old and new members work together the architect the HR workflow. Large Organisations have highly empowered, autonomous HR supervisors. Most of the HRTech stack’ is decided upon and HRs focus on strategic elements like People Analytics and Employee Retention. 3-5 person HR Team 5-15 person HR Team 20+ person HR Team 65% HR Team is HR Leaders** 38% HR Team is HR Leaders** 31% HR Team is HR Leaders** HR Spend: $3,600 per FTE** HR Spend: $2,000 per FTE** HR Spend: $1,500 per FTE** *JTBD: Jobs to be Done **Source: Workforce Analytics: A Critical Evaluation: How Organizational Staff Size Influences HR Metrics (SHRM, 2015) ‹#›

27. Employee Lifecycle Hiring Process Tenure Offboarding Employer Branding Knowledge Systems & Productivity Tools Talent Planning & Discovery Admin & Workforce Planning Exit Management Assessments Training & Coaching Contracts & Ref Checks Performance Management, Rewards & Recognition Alumni Services Onboarding Payroll & Finance Benefits + Culture Here are the decision makers in small businesses (<250 FTEs) C-suite Head of Talent Mgmt/ HR C-suite Head of Talent Mgmt/ HR C-suite - usually CFO C-suite Head of Talent Mgmt/ HR C-suite - usually CFO ‹#›

28. Employee Lifecycle Hiring Process Tenure Offboarding Employer Branding Knowledge Systems & Productivity Tools Talent Planning & Discovery Admin & Workforce Planning Exit Management Assessments Training & Coaching Contracts & Ref Checks Performance Management, Rewards & Recognition Alumni Services Onboarding Payroll & Finance Benefits + Culture Here are the decision makers in mid-size businesses (250-1k FTEs) CHRO Head of Recruitment HRBP CHRO CHRO Head of Recruitment CHRO Head of Recruitment CHRO Head of Recruitment Head of Talent Mgmt Head of Talent Mgmt CHRO L&D Head Functional Head/ BUH Head of Talent Mgmt HRBP CFO Benefits Administrator CFO Benefits Administrator CHRO HRIS HRBP Employees Benefits Administrator HRIS CHRO HRBP Head of Talent Mgmt Functional Head/ BUH ‹#›

29. Employee Lifecycle Hiring Process Tenure Offboarding Employer Branding Knowledge Systems & Productivity Tools Talent Planning & Discovery Admin & Workforce Planning Exit Management Assessments Training & Coaching Contracts & Ref Checks Performance Management, Rewards & Recognition Alumni Services Onboarding Payroll & Finance Benefits + Culture Here are the decision makers in large businesses (>1k FTEs) Head of Talent Mgmt Head of Recruitment Head of Talent Mgmt Head of Recruitment Head of Recruitment Head of Talent Mgmt Head of L&D Functional Head/ BUH Head of Talent Mgmt Functional Head/ BUH Head of HR Benefits Administrator Benefits Administrator Head of Talent Mgmt Head of Talent Mgmt Employees HRIS HRIS Head of L&D ‹#› Procurement teams involved in the sign off of all buckets

30. HRTech startups have expanded ACV (and TAM) by becoming full stack solutions. But, how do you build towards full stack?

31. Full stack solutions expand ACV by doing multiple functions Full Stack Point Solution Likes Dislikes Likes Dislikes Buyer Perspective Value Buy Single Source of Truth Quick Turnaround of HR Strategy Added Time and Cost for Implementation & Customization Solves for common problems, but not necessary niche ones Many decision makers involved Quick Implementation Serves Specific Needs Highly customized solution, with low to no cost of customization Fewer decision makers Siloed Use, Complex BI interoperability Point solutions are hard to fit in HR Budget All tools will need to integrate with one another to form a robust solution User Perspective Offers end-to-end workflow integration Resistant to changing existing ways of work and adopting new tools User Friendly UI Reduced Implementation time, and usually self-service Depth of Functionalities, Gamification Multiple logins Multiple training sessions required Our Perspective Full stack solutions offer High ACVs⁽¹²⁾ and High LTV⁽¹³⁾s. Full stack solutions should integrate easily into the org’s workflows and should show high adoption metrics, and should prioritise spend for customer success, top down sales expertise and solve for credibility. This is a highly competitive space with players like Salesforce, Oracle, SAP, Microsoft, Zoho, Darwinbox etc Point Solutions eventually go full stack and should ideally build multi-touchpoint products (Eg: People analytics tools will inform rewards programmes, compensation planning). These are low ACV products and therefore should demonstrate volume. GTM will typically be both bottom up and top down. Certain wedges are crowded such as payroll and HRIS ‹#›

32. And some subspaces grow into full stack platforms more easily 🚀 What creates an attractive wedge (or starting point) to build a full stack platform from? ✅ H igh priority area for employers (eg: Attendance tracking, Govt mandated insurance / EPF, Payroll) ✅ Organic and frequent usage of platform takes place (Eg: OKRs and Performance tracking, Daily communication platform) ✅ Has valuable data capture → i.e. is a powerful system of record (Eg: Payroll, Tax / Compliance) Hiring Process Tenure Offboarding Employer Branding Knowledge Systems & Productivity Tools Talent Planning & Discovery Admin & Workforce Planning Alumni Services Assessments Training & Coaching Contracts & Ref Checks Performance Management, Rewards & Recognition Exit Interviews Onboarding Payroll & Finance Benefits + Culture Based on these criteria, we have evaluated which subspaces are not likely / less likely / more likely to become full stack solutions Not Likely More Likely Less Likely ‹#›

33. Let’s combine each of these to identify key opportunities🚀

34. We triangulated signals to find key opportunities for startups🕵️‍♀️ Is this a large TAM? Is this a whitespace? Where is this in the priority stack? Is this a powerful wedge? High Switching Cost? Talent Acquisition ✅ 🟡 ✅ 🟡 🚫 Knowledge + Productivity Tools ✅ ✅ 🟡 🟡 🟡 L&D + LMS ✅ 🟡 🟡 🚫 ✅ Performance Management + R&R 🟡 ✅ ✅ ✅ 🟡 CompBen + Payroll ✅ 🚫 ✅ ✅ ✅ Benefits + Culture ✅ ✅ 🟡 🟡 🟡 HRMS 🟡 🚫 ✅ ✅ ✅ Alumni Services 🚫 ✅ 🚫 🚫 ✅ ✅ Yes 🟡 Maybe 🚫 No ‹#›

35. These are the opportunities we’re excited about in HRTech 🔥 Hiring Process Tenure Offboarding Employer Branding Knowledge Systems & Productivity Tools 🚀 Talent Planning & Discovery Admin & Workforce Planning 🚀 Alumni Services Assessments Training & Coaching Contracts & Ref Checks Performance Management, Rewards & Recognition 🚀 Exit Interviews Onboarding Payroll & Finance 🚀 Benefits + Culture 🚀 ‹#›

36. Opportunity #1: Knowledge & Productivity Tools Hiring Process Tenure Offboarding Employer Branding Knowledge Systems & Productivity Tools . Talent Planning & Discovery Admin & Workforce Planning 🚀 Alumni Services Assessments Training & Coaching Contracts & Ref Checks Performance Management, R&R . Exit Interviews Onboarding Payroll & Finance . Benefits + Culture . Tools like Notion, Slack, etc. effectively have endless whitespaces / TAM⁽⁶⁾ because there is always deeper efficiency / UI improvement possible. They have high switching costs, powerful ICP (typically CBO / CEO) and lend well to plug-ins and platform integration models. ‹#›

37. Opportunity #2: Admin & Workforce Planning Hiring Process Tenure Offboarding Employer Branding Knowledge Systems & Productivity Tools . Talent Planning & Discovery Admin & Workforce Planning Alumni Services Assessments Training & Coaching Contracts & Ref Checks Performance Management, R&R . Exit Interviews Onboarding Payroll & Finance . Benefits + Culture . As current software suites become more archaic , new horizontal tools that tie into internal databases, talent management, integrate with payroll software – all while improving usability , efficiency, and flexibility of data and applications will see global traction. ‹#›

38. Opportunity #3: Performance Management + R&R Hiring Process Tenure Offboarding Employer Branding Knowledge Systems & Productivity Tools . Talent Planning & Discovery Admin & Workforce Planning . Alumni Services Assessments Training & Coaching Contracts & Ref Checks Performance Management, Rewards & Recognition Exit Interviews Onboarding Payroll & Finance 🚀 Benefits + Culture With jobs becoming more complex and more workers going remote, performance management tools are seeing a revamp – becoming more real-time, feedback and L&D oriented, and flexible. We’re excited to see a new generation of intelligent performance management systems for a new generation of people managers that better tie into incentives , R&R, and culture. ‹#›

39. Opportunity #4: Payroll & Finance Hiring Process Tenure Offboarding Employer Branding Knowledge Systems & Productivity Tools . Talent Planning & Discovery Admin & Workforce Planning . Alumni Services Assessments Training & Coaching Contracts & Ref Checks Performance Management, R&R Exit Interviews Onboarding Payroll & Finance . Benefits + Culture With more workers going remote, higher % of cross border workers, and increased demand for fintech services like early-salary loans, etc. payroll and finance will become a more complex product that better integrates into performance management, expense and budget management, and benefits. ‹#›

40. Opportunity #5: Benefits & Culture Hiring Process Tenure Offboarding Employer Branding Knowledge Systems & Productivity Tools . Talent Planning & Discovery Admin & Workforce Planning . Alumni Services Assessments Training & Coaching Contracts & Ref Checks Performance Management, R&R Exit Interviews Onboarding Payroll & Finance . Benefits + Culture Increased competition for talent has led to organizations using their benefits and culture to their advantage – as employee attraction and retention hooks. Increased focus on physical and mental wellness as well as corporate retreats and mentorship have created an opportunity for new providers (and managers) of benefits. ‹#›

41. Bonus : Alumni Services Employee Lifecycle Hiring Process Tenure Offboarding Employer Branding Knowledge Systems & Productivity Tools Talent Planning & Discovery Admin & Workforce Planning Exit Management Assessments Training & Coaching Contracts & Ref Checks Performance Management, Rewards & Recognition Alumni Services Onboarding Payroll & Finance Benefits + Culture ‹#› Based on our conversations with HR Leaders, large organizations are now beginning to look into alumni management and exit processes more deeply, as a way to build better alumni brand, and leverage the network for future sales and hiring. We are yet to see a strong productized experience of alumni services, and believe there exists a great need here. That said, given that most of them saw this as a lower priority than other services, and that the current macro-environment is conditioning companies to pay only for necessary tools, we have considered these spaces ‘low priority’ for now.

42. We believe this is the ‘ right to win ’ in this space🏆 Full Stack Potential : Platforms that can expand from their starting wedge and cover more jobs-to-be-done (for example: expanding from payroll to early salary benefits) can increase TAM and switching costs Enterprise Focus : Startups selling to larger companies can aim for higher ACVs, more stability (these companies have lower mortality), higher stickiness (harder for them to move platforms / migrate data) – but at the cost of a longer sales cycle and tougher compliance needs Global GTM : Given India’s limited enterprise market / low HRTech spend, startups need to add global customers to cross the $10m revenue barrier → they have to (a) excel at cross-border GTM, (b) build world class products, (c) pick spaces that allow for cross border fulfilment Powerful ICP : Different CXOs have different levels of budgets and approval authority → most HRTech startups will typically see a buyer-user disconnect therefore startups that prioritise adding value to powerful ICPs see shorter sales cycles, higher ACVs, and stickiness Painkiller; Not a Vitamin : Companies selling in ‘vitamin’ or lower priority subspaces are more likely to to get cut during budget cuts and tend to see longer sales cycles, harder budget approvals Enterprise Sales / HR-Experienced Founders : HRTech almost exclusively rests on enterprise sales (including global enterprise sales) → having a co-founder who is experienced in enterprise sales is an added advantage Building in a Non-Crowded/Unsolved Wedge : As you can see in our startup map, most spaces in HRTech are crowded → unless you are building a 10x better solution, you are unlikely to get high margins or large market share in a crowded space 1 2 3 4 5 6 7 System of Record : Platforms that are inherently powerful systems of record, i.e. capture, store, and present large key data see higher platform stickiness, high switching cost, and higher ability to become full stack. 8 ‹#›

43. Finally, here are some exciting themes we’re seeing that could further change HRTech 🔮

44. Narrow ing of TAM Vertical HR Software plays in smaller (or more limited ) markets. This can be overcome by picking a larger/high spend bucket to play it. End state Very few vertical HRTech plays have gone all the way to IPO. Favourable outcomes would then be M&As, full stack expansion, expansion into related verticals. Concentration Risk Industry shocks and recessions greatly affect vertical players. V erticalization is a strong differentiator in a red ocean I ndustry-specific features result in stronger adoption and higher switching cost Speaking the industry language builds credibility, wins market share and results in strong customer loyalty Vertical focussed products with rich industry data result in informed product expansion and therefore higher ACVs Compliance-heavy industries require industry-specific reporting, employee training, checks and balances to ensure regulatory compliance, risk mitigation and improved efficiency. These markets typically exhibit a job supply and demand mismatch and should aim to help companies hire job-ready talent on-demand and solve for bulk hiring. Eg: Healthcare, Hospitality, Retail Industry. By tailoring technology to specific industry needs, HRTech can unlock new opportunities, drive growth and win market share in underserved or growing niches. Industries with complex business processes prioritize workflow automation, workforce visibility, and efficiency.. Theme #1: Verticalization of HRTech Where does v erticalization make sense? Industries with High Employee Churn Underserved Markets & Growing Niches Industries with Complex Business Processes Compliance Heavy Industries Why We Like Vertical Focussed HR Software Challenges in Verticalization of HR Software Verticalization is a proven strategy to win market share in a competitive market category. The key strategy here is to find underserved industries or growing market niches and solve for their industry-specific needs. ‹#›

45. The Gig Economy market size is growing at a CAGR of 16.18% and is expected to be a $873B market by 2027 [Source: LinkedIn Pulse] . Niti Aayog estimates that India’s gig and platform workforce will expand to 23.5M workers by 2029-30. Today 47% of these workers are engaged in medium-skilled jobs, and 22% are engaged in high-skilled jobs. Theme #2: Rise of gig and contingent white collar workers Gig worker and contingent worker are terms that are typically used interchangeably. We distinguish between the two basis the duration of employment: Gig workers typically work on a per-project or per-task basis Contingent workers are engaged in temporary work for continuous contractual periods of time. Problems to Solve for in White Collar Gig Work 💡 Employer-Gig Worker Matching / Discovery 💡 Assessment, DD, & Quality Assurance 💡 Project Management Tools 💡 Finance & Business Management 💡 Skill Development & Training 💡 Benefits & Support 💡 Networking & Socialization Tailwinds Supporting White-Collarization of Gig & Contingent Work ✅ Hustle Culture, Moonlighting & Aspirations ✅ Emergence of Platforms Enabling Freelancing ✅ Globalization & Work-Without-Borders ✅ Changing Work & Workplace Preferences ✅ Job Market Volatilities ✅ Economic Downturns & Cost Cutting ✅ Limited Supply of Skilled Workers ‹#›

46. Theme #3: Move towards hybrid / remote work The COVID-19 pandemic forced many companies to adopt remote work which has now translated into hybrid work policies. This accelerated the adoption of flexible work across various industries in order to prioritise business continuity and employee health. While fully remote work is not as prevalent as it was in pandemic years, most organizations have opted to continue with hybrid work. Tailwinds to suggest hybrid work is here to stay ✅ Employee Preferences: Majority of the workforce today prefers hybrid or flexible work arrangements over fully remote or fully in-person models. Hybrid work has led to higher job satisfaction and improved retention rates. WEF Survey across 95 countries showed that 68% of respondents prefer hybrid work, 24% fully remote and 8% prefer fully work from office. ✅ An Alternative Employee Benefit: Hybrid work policies are acting as alternative employee benefits and helping organizations attract and retain talent. A McKinsey Report shows that flexible working arrangements are now one of the top 3 motivators for Americans who are seeking new jobs. ✅ Cost Savings to Employers: Remote and hybrid work policies enabled employers to cut down on office rent, utilities etc. Core Problems to Be Solved 💡 Employee Engagement & Team Building 💡 Workflow & Process Automation/Digitization 💡 Performance Evaluation & Monitoring 💡 Mental Health & Wellness ‹#›

47. Theme #4: Employee benefits in India While benefits has the makings of a vitamin and not a painkiller, this space is particularly interesting from an India angle for the following reasons: ✅ India’s Corporate Wellness Market is an INR 23,000cr opportunity; India’s Corporate Health Insurance is an INR 31,000cr opportunity [ Mint ] ✅ There is strong compliance and regulation driving employers to offer benefits to their talent force. ✅ As there is limited supply of highly skilled workers in India + increased competition for employers to attract and retain best in class talent → discretionary benefits help employers win their preferred candidates. ✅ In a credit starved, high interest market like India, many innovative financial products are being built around corporate loans and advances, HRIS employee data. Statutory Benefits Discretionary Benefits Gratuity ESI EPF Bonus Maternity Benefits PTO Memberships Health & Life Insurance Employee Purchase Programmes Meal Tickets/ Coupons Earned Wage Access Mental & Physical Wellness Travel & Transport Corporate Credit Cards ‹#›

48. With Contributions From Amit Malik | Founder, Wadzpay Ashish Kumar Jha | Founder, Vani Manisha Kadagathur | CHRO, Vini Cosmetics Nagmanjunath Shivakumar | Advisor, Blume Ventures Partha Neog | Co-founder & CEO, Vantage Circle Subhendu Panigrahi | Co-founder & CEO, Skillenza Shubhranshu Kumar | Founder, Keeper Yashna Ray | Partner, MetaMorph

49. Blume Ventures | Fall 2023 Thank you! For questions or feedback please contact: Nachammai | [email protected] Radhika | [email protected]