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VCs bet on European startups building HR tech for remote work

More European companies are emerging to facilitate remote recruitment.

By Eleanor Warnock

Credit: WorkMotion founders Carsten Lebtig, Karim Zaghloul, and Felix Steffens. Credit: WorkMotion

VCs continue to bet big on remote working as a cure for talent shortages, putting more money into companies facilitating the hiring and management of workers abroad. 

The most recent European company to receive funding is German startup WorkMotion, which announced a $24m Series A on Tuesday to scale its platform for hiring and managing employees abroad. The round was led by Activant Capital and is the US growth equity fund’s first German investment. 

“In Europe, there’s a war for talent and a shortage of talent, specifically at the high-growth companies like startups”, says WorkMotion cofounder Carsten Lebtig.  

Investors and founders have over the past two years increasingly argued that embracing more remote work will give startups access to new pools of talent, breaking up the traditional geographic monopoly on tech innovation held by hubs like Silicon Valley and London. But hiring and managing remote teams can also be a compliance and paperwork challenge for small companies with lean budgets. 

WorkMotion helps companies hire employees where they don’t have a legal entity and takes care of creating an employment contract that complies with the respective laws of the country of employment and with those of the company’s headquarters. WorkMotion then hires the employee locally and the employee works for the customer. 

European companies enabling remote hiring

While companies helping corporates hire remotely have existed for a decade, a new tech-enabled cohort has emerged in the US and Europe during the pandemic. 

Other European companies to receive backing for remote team recruitment and support include Remote, which became Portugal’s fifth unicorn after closing a $150m round last month. Remote provides a platform to help companies hire and pay employees from anywhere in the world, covering international payroll, taxes and immigration services. Israeli company Papaya Global also raised a $100m Series C in March of this year for its global workforce management services. 

Speaking to Sifted last year, Job van der Voort, cofounder of Remote, said he anticipates 40% of workers to continue in hybrid or fully remote roles after the pandemic ends. 

“Work itself will move towards providing you with more freedom. The best employers will provide all of the necessities to do your best work — and that doesn’t mean a cushy office in a metropole. Equipment, freedom in your time and in your work and generous benefits that make life easier.”

Other notable rounds in 2021 include London-born Oyster’s $50m Series B to build an HR platform for distributed teams in June, just a few months after raising a Series A. At the earlier stages, Dublin-based Boundless raised a €2.5m seed round from Fyrfly Venture Partners and Ada Ventures in June to help companies with the compliance headaches of remote hiring, and Omnipresent raised an £11m Series A in January. 

Compared to competitors like Remote, WorkMotion’s Lebtig says that WorkMotion’s advantage is being from Germany, where labour laws are stringent. 

Lebtig says that roughly half of the talent hired by WorkMotion’s clients come from Spain, the UK, Poland, India and Germany. WorkMotion charges a flat fee per employee and then has tiered pricing depending on the number of employees. 

Relocating versus remote hiring

At the same time, some startups and policymakers are betting that companies will still want to relocate staff on the ground. Those include talent relocation startup Jobbatical, which recently partnered with Berlin Immigration Authorities to fast-track immigration applications. 

Last month, the French government also announced it was expanding its tech visa scheme and targeting more expats. The measures include a new team to offer support to applicants and partnerships with banks and apartment providers to help provide a streamlined service for people arriving in the country. Two-thirds of French startups say their primary concern is how to hire the right talent to facilitate their growth, according to the French government. 

WorkMotion’s Lebtig says he doesn’t believe in a Manichaean divide between fully remote and fully in the office or remote versus relocating. 

We don’t believe that every company has to be 100% remote. We believe that way we work will change but there will always be an office somewhere, a headquarters.”

Lebtig says he sees a “massive opportunity” in enabling companies to allow employees to do temporary remote work while being fully compliant with labour and tax laws. In other words, someone in Germany working for a German company can work for two weeks out of Spain. While many companies have said that they let employees work from anywhere, ‘anywhere’ usually means anywhere they have a legal entity, says Lebtig. 

Eleanor Warnock is Sifted’s commissioning editor. She tweets from @misssaxbys

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