Why We Invested in Hatch

Today, we’re excited to announce our latest seed investment into Hatch, an Australian employment marketplace, alongside Rampersand, Investible, Jelix Ventures, Alberts.

Background to Our Investment

The path for young professional job seekers has historically been relatively straightforward. Job families were uncomplicated, university degrees usually informed which discipline you ended up in and social media for the most part did not exist. Inter-generational disruptions in the office were largely benign. Life was much simpler. As a result, the online jobs boards — with their limited use of data and ‘spray and pray’ approach to promoting jobs to a candidate — were largely sufficient.

However, the world has changed. Job families have become more complex. Companies have become more than just places of work and now weigh in on a myriad of social and political issues. Technological advancements have enabled the vast majority of industries to leverage data to provide customers with highly personalised and, ultimately, more enjoyable experiences. And today, more than ever, young people don’t want to be defined by their CVs. They want to take their skills to new places and put their values into action.

And young professionals arguably have a more complicated relationship with employment than their older predecessors had. They don’t rush to apply to just any position posted. They do their research on a company to decide whether or not they can see themselves working there. They want to feel aligned with an employer’s mission, values, and approach to business. Amplifying this attitude is the fact that, for a lot of younger Australians, home ownership is becoming unattainable and so career choices don’t revolve fully around remuneration structures. Often of greater importance than a remuneration package is having empathy for their employer and feeling as though they are where they are meant to be.

However, despite these clear and significant differences, job seekers of all ages are pushed onto the same platforms (read: Seek, Indeed, Linkedin) that apply a one-size-fits-all model. This results in a poor user experience (predominately for younger candidates) which then manifests itself into inefficient screening and poor role selection, contributing to high turnover.

Enter Hatch

Hatch is an employment marketplace for the next generation.

Hatch has optimised the job-seeking experience for young professional candidates and their employers by having an intimate understanding of its users’ specific needs. It has then leveraged a number of modern tools available to efficiently address them.

At the core of Hatch’s model is one key insight: successful hiring is based on holistic fit and that the best hires are made at the intersection of ability, team fit and motivation.

From there, Hatch differentiates itself through the use of a proprietary AI matching algorithm and a candidate-first user experience. The matching algorithm, developed by Hatch’s team of engineers and data and behavioural scientists, has the unique advantage of learning from outcome data, which is valuable as the data improves matches for both sides. In this sense, the platform works similarly to some dating applications that are continually learning about a user and able to become ‘smarter’ over time.

The team at Hatch have embraced this comparison with dating apps. Similarly, the platform also enables candidates to build a rich profile complete with short videos and skill examples that can be used to unlock all applications. By also requiring employers to create profiles that shed light on the hiring teams’ culture, values and working style, candidates are able to discover, connect with and follow great teams before applying.

In terms of value available to employers, they are provided with tools that enable them to build their brand with the next generation. Curating content is one such example and a critical element of differentiating in a competitive hiring environment. Today’s workforce has been raised on storytelling (read: social media) and they expect employers to tell authentic stories as a way to show transparency and earn credibility. Hiring companies are also able to use the Hatch platform to build communities of aspirational employees. Similarly to a candidate getting more accurate matches by enriching their profile, an employer can also increase the quality of matches by engaging more with their profile.

Another critical element of the value proposition for employers is the access they get to high-quality candidates, who are not present on other job boards. Employers using the platform have rated almost 95% of hires through Hatch as High/Very High Performers and also reported a better Diversity of hires.

Finally, Hatch significantly reduces both the direct (monetary) and indirect (time) costs of hiring. The team estimate that hiring through Hatch is 2–3x cheaper than hiring using an incumbent platform. In addition to this, 10+ hours can be saved per each role through utilising the matching algorithm and by being able to filter through candidates faster due to the rich candidate profiles.

Continually innovating and delivering features that improve the experience for both candidates and employers will remain important. This is to ensure ample depth on both sides of the marketplace to deliver an optimal experience for all participants. As more and more leading employers come online and start to realise the benefits provided by Hatch, more high-quality candidates are motivated to create profiles, and you start to see those much sought after network effects kick in.

Strong Early Traction

Hatch’s traction over the last couple of years has been nothing short of amazing and was a big contributor to our investment decision.

More than 150,000 young professionals have now set-up accounts on Hatch, a number that is growing steadily month-on-month, seeking to match with one of the hundred-plus blue-chip Australian employers utilising the platform including:

In addition to the improving depth of the marketplace, key metrics like matches and candidates shortlisted for interview are also trending in the right direction. To date, more than 2B recommendations have been made with an average matching score of 88%,
and ~75% of successfully filled roles to date on the platform have been Hatch recommendations.

Sizable and Growing Market

The size of the next generation of job seekers, now disillusioned with the status quo and looking for a more seamless and tailored experience, has reached critical mass and urgently needs servicing. The numbers above support this.

Gen Z and Millennials currently account for 45% of the workforce, a number that is expected to increase significantly by 2030*. The total spend on young professional job recruitment in Australia is already >$1B. In the USA, where Hatch has a mid-term view, this number is $18B.

Hatch has a strong advantage versus incumbent players in that it has a huge amount of intelligence on its target users, both philosophically and from a technological point of view, in terms of what resonates with them. Incumbent players, many of which that have been around for 20+ years, will find it challenging to address the specific needs of a genuinely unique demographic of young Australians.

Backing Experienced Founders

Both Hatch co-founders, Adam Jacobs and Chaz Heitner come from very strong pedigree. Adam was a Co-Founder at The Iconic and Chaz was a Co-Founder at ZipCo. Their experiences hiring hundreds of employees in these previous organisations directly led to formation of Hatch.

In addition to possessing complementary skill sets, they are true mission-driven founders with strong communication and leadership skills that have enabled them to align the various parts of the organisation to work towards a common goal.

A quote we liked from Adam that we believe highlights their Founder-Market fit was, “Personally, ever since my philosophy studies, I’ve been interested in identity. The Iconic allows customers to explore identity through fashion — the boundary of our inner and outer worlds. Hatch allows people to explore identity through work — the primary way we contribute to communities we care about.”

We are excited to be on the journey with Adam and Chaz and, through our Board Observer role, intend to work closely with them over the timeline of our investment.

Media mentions:

Seek for Gen Z’ start-up raises $7m

The Iconic and Zip co-founders raise $7 million for AI jobs platform

Sydney-based Hatch raises $7 million for its AI-powered jobs marketplace

Gen Z jobs marketplace Hatch banks $7 million Seed round

AI job matching platform Hatch raises $7m to challenge legacy marketplaces

It has taken a while, but this notion of investing responsibly within the venture capital system is finally getting its time in the sun! Let’s hope it stays that way (but doesn’t get too hot).

*Hatch provided data

This article was written by Tristan Terry of Aura Ventures. Read more about venture capital.