Findem secures $30M to leverage AI for talent recruitment

Hiring the right talent has rarely been easy, but in the midst of the “great resignation” — the record number of people leaving their jobs during the pandemic — it’s become even more challenging. Separate Jobadder and Officevibe 2021 polls found that 72.8% of recruiters are struggling to find relevant candidates, and that top candidates are only available for about ten days on average before being hired.

According to a Recruiter Nation survey, 64% of recruiters expect their budgets to increase in the next six to 12 months — but money rarely equates to success. The roadblocks often lie in identifying the best-fit candidate for a particular role, whether at the managerial, executive level, or below. Robert Half reports in a 2019 study that more than three in four people would apply for a job even if they aren’t qualified.

Some recruitment software vendors espouse the benefits of AI, which they argue can index and search through pools of candidates more efficiently than an HR professional alone. One such vendor, Findem, says its AI can analyze more than 100,000 public sources to find candidates matched for a role, searching for people based on their attributes.

To expand its product, Findem — whose customers include teams at more than 100 organizations including Google and RingCentral — raised $30 million in a series B funding round led by Four Rivers and Quarry Capital Management with participation from Wing Venture Capital, the company announced, bringing its total raised to $37.3 million. CEO Hari Kolam says that the new capital will also be used to support product development advancements, including the Q1 launch of a new self-service model that’ll enable customers to post their open positions to job boards. 

AI-powered recruitment

San Francisco, California-based Findem was founded in 2019 by Kolam and Raghu Venkat. Kolam previously founded Instart, a web app delivery platform, prior to stints at Sun Microsystems and IBM. Venkat was a member of the technical staff at data management company Aster, and spent time at Google as a software engineer.

“Every company is hiring right now, and it’s tough work to build a high-quality and diverse talent pipeline. Pretty much every company we come across is struggling with it, and many are paying premiums to try,” Kolam told VentureBeat via email. “Talent acquisition teams are spending a lot of their money on staffing agencies because great talent is so hard to hire today, but the rub is that they can take a cut of 20% to 30% of a new hire’s salary. On top of that, staffing agencies are trying to scale by hiring more recruiters, but there’s a shortage right now. When you’re taking a largely manual approach to talent sourcing, which is common among staffing agencies, it’s time-consuming, costly and wrought with quality issues. There’s also a threshold you realistically can’t surpass.”

Findem says that it combines AI with “contextual logic” to emphasize a candidate’s relevance for a given position. Using Findem, HR teams can search by characteristics including whether a person has seen a startup to a successful exit, builds diverse teams, or is a long-tenured employee.

In addition to public sources, Findem can search across internal employees and existing profiles in an applicant tracking system. In total, Findem — which also provides tools to automate candidate engagement, analyze talent pools, and measure diversity — sources from more than 750 million profiles, CEO Kolam says.

“We are in the business of deriving what a successful hire really means to a company, and a lot goes into the data mix … We’re training models from multiple sources to understand factors such as which employees are successful and why, and what success means for a specific company,” Kolam continued. “The platform has built-in contextual logic to help companies recognize when what it’s finding in terms of candidates is what you’re after. It takes your search intent and finds people who match that intent by scraping, indexing, and connecting the dots between multiple data sources. It also filters results, so hiring teams don’t have to.”

Potential for bias

Employers who adopt AI-powered recruitment technology run the risk of introducing bias into the hiring process. Even the best AI-based systems can struggle to evaluate soft skills, like teamwork and problem-solving. As a result of bias and other technical flaws, sourcing AI might not inform people of a job opportunity — determining who has access to the hiring process.

For example, Amazon was forced to scrap an AI recruiting tool that showed a preference for male candidates. A 2021 analysis of job board recommendations, meanwhile, found that 40% of jobseekers had experienced recommendations based upon their identities rather than their qualifications and that 30% received job alerts that were below their current skill level, regardless of industry.

“[P]ersonalized job boards like ZipRecruiter aim to automatically learn recruiters’ preferences and use those predictions to solicit similar applicants,” Harvard Business Review’s Miranda Bogen writes in a 2019 piece. “If the system notices that recruiters happen to interact more frequently with white men, it may well find proxies for those characteristics (like being named Jared or playing high school lacrosse) and replicate that pattern.”

In recognition of the growing problem, New York City recently passed a law that prohibits businesses from using AI or algorithm-based tools to make hiring decisions about New York City residents without first auditing those tools for bias.

Findem claims to have made efforts to mitigate bias in its recruitment algorithms. According to Kolam: “Our platform makes the talent funnel diverse without the need to identify gender or ethnicity at the individual level. It’s a probabilistic approach and we rely on multiple datasets to achieve this. By making the funnel diverse, we’re obviating the introduction of human bias. Diversity decisions are absolved from the recruiter, yet they’re still able to deliver high-quality and diverse talent pipelines.”

Expanding segment

Sixty-five-employee Findem is the beneficiary of a rapidly expanding recruitment software market. According to Fortune Business Insights, the global recruitment software market is set to grow from $1.75 billion in 2017 to $3.09 by 2025.

Automation adoption is on the rise, too, driven by increasing workloads and sourcing challenges. (According to Forbes and the U.S. Department of Labor, recruiters spend nearly a third of their workweek sourcing candidates for a single role and the average cost of a bad hire is around 30% of the employee’s first-year earnings.) Even before the pandemic, recruiters were expressing an interest in automation technologies for the hiring pipeline. Sixty percent of companies responding to a 2019 Mercer poll said that they planned to boost their use of workplace automation, including in recruitment.

Findem’s competitors include HireEz, Celential.ai, Sense, Fetcher.ai, Xor, and AllyO, all of which use AI to identify candidates who might be a good match for available roles. Moving skillfully among the competition, Findem says that it experienced a 500% increase in customer growth and eight times top-line revenue increase over the past year.

“We’re planning to use this new capital primarily for product development, including launching a new self-service model this quarter where users can post their open positions to job boards and get access to a new and highly targeted candidate pipeline. Expansion is also a top priority and we’re looking to grow into new international markets,” Kolam added.