Performance Management Tech Firm 15Five Raises $52M
The privately held company, founded in 2011, specializes in technology aimed at helping HR leaders improve their performance management processes and giving managers the tools to have ongoing performance conversations with employees. The latest investment, led by New York City-based Quad Partners, brings the company's total funding amount to $94.1 million, according to Crunchbase.
"One of our founding beliefs was that the best companies in the future would be the ones that figured out how to motivate their people and unlock their potential, informed by the understanding that thriving humans create thriving businesses," said 15Five CEO David Hassell, in a blog post announcing the funding news. "That’s still true, but how we do that has evolved."
Driven in part by new hybrid and remote work options, new generations of employees have different expectations from their employers, Hassell said. They're looking purpose-driven work, an inclusive workplace and more professional development.
"We believe that managers are the keystone of high performance, not just in overseeing the work, but in helping to tap into the unique strengths and passions of every member of their team," Hassell wrote.
Traditional performance management is driven by an annual performance review given by a manager that is inaccurate and rife with biases, said 15Five Chief Marketing Officer Julia Stead in an email interview with Reworked. The company's software aims to break that mold by facilitating weekly digital check-ins so managers can provide more frequent feedback and answer employee concerns in the moment, she said.
"When managers and employees do sit down for a 360 quarterly, semi-annual or annual review, these reviews are informed by weeks of performance data within 15Five, which eliminates biases and provides a more accurate picture of performance," Stead said. "Additionally, because the continuous feedback process facilitates trusted relationships and allows managers to support employee growth and improved performance, reviews can be more positive experiences that look at past performance as well as focus on employee strength and future career trajectory."
Plans for the Funding
15Five plans to use the funding to invest in product development that connects the software's ability to measure performance through reviews, engagement surveys and OKRs to coaching and talent development tools that managers can use to improve employee performance. It will also expand into new markets and pursue potential acquisitions, according to a company statement.
The company's software suite includes four products:
- Engage: Assessment and analysis tools to measure and improve employee engagement.
- Perform: Performance review tools to measure and assess employee performance.
- Focus: Goal setting and OKR tools to plan and track employee and company objectives.
- Transform: Learning software to help managers drive higher performance.
More than 3,400 companies use 15Five's products, according to company figures, and the target market is small- and medium-sized businesses in the 100 to 2,500-employee range.
"We recognize that the needs of HR organizations differ greatly between a company with 500 or 1,000 employees, and a company with 10,000 employees. Rather than try to create a 'one size fits all' solution which rarely does, in fact, 'fit all' we've chosen to build solutions that serve a specific market," said Stead.
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The company is focused on developing easy-to-use and intuitive software that requires minimal operational overhead, she added. "This approach enables HR leaders at small, medium and fast-growing companies to stay nimble, move quickly and drive high adoption within their manager and employee base," Stead said.
Current customers include tech firms Spotify, CreditKarma, Hubspot and Pendo. Pricing ranges from $4 per user per month for individual modules to a $14 per user enterprise price that includes access to 15Five's full suite of products.
An Evolving Talent Management Tech Market
Both the coaching market and performance management market are continuing to expand despite economic headwinds.
Reworked reported last September that venture capitalists are making big bets on tech-enabled coaching solutions. Coaching platform BetterUp landed a $300 million Series D round in October 2021 that valued the company status at $4.7 billion, and coaching startup TaskHuman raised $20 million in June 2022.
As organizations have developed a larger appetite for coaching, the technology space has exploded, wrote Dani Johnson, principal analyst for RedThread Research, in a November 2021 article on Reworked. Her firm's database has grown to more than 45 vendors who offer coaching functionality.
The performance management software market is also proving to be a competitive one, with a wide range of software tools from project management tools like Asana and OKR and goal management tools like CultureAmp, Workboard and Perdoo, among others. People management sofware platform Lattice released a new OKR and Goals product in March 2022, and WorkBoard followed suit a month later.
Performance management is a talent practice that touches every single employee in the organization, wrote Reworked contributor Stacia Sherman Garr, and leaders need a plan for accommodating hybrid work practices and how it ties into the bigger picture of employee experience. Redmond, Wash.-based software giant Microsoft acquired OKR software specialist Ally.io in October 2021, with plans to fold the company into its Viva employee experience software platform.