And on calls and in interviews, I actually use the phrase “kind of weird.” It’s colloquial and not exactly accurate, but it’s a phrase I stand by. This market seems full of contradictions and in-betweenness. We’re in the middle of a recession, not yet in a boom. Interest rates remain higher than expected, showing both the resilience and fragility of the ecosystem. And depending on who you talk to, there’s either too much or too little venture money as LP wallets close. So if it’s an uncertain time for founders and VCs, it’s likely to be just as (or even more) true for startup employees.
” [talent] “The talent market is in a really strange place right now,” said Atli Thorkelson, vice president of networks at Redpoint Ventures, which just released a report on the state of talent.
The report includes new data that suggests startups have lost some of their luster: For the first time in at least five years, the total number of employees at venture-backed startups fell in 2023. Strictly speaking, this isn’t to say that startups aren’t hiring or that people are quitting in droves.
“They just have been very slow in recruiting replacements,” Thorkelson said.
Naturally, there’s one sector that’s out of line with this trend, and you can almost certainly guess what it is: AI startups will “rapidly grow their employee base” from 2023 onwards, according to the report. What’s more, data science and machine learning jobs grew 56% as a share of total job postings last year, and a further 9.4% in the first quarter of this year. Thorkelsson expects this demand to continue to grow, but with conditions:
He said there is a difference between “true AI talent” who can build advanced systems, such as LLMs, and more AI-like talent who can help implement AI in products and services. Currently, the market confuses these two categories, leading to misunderstandings about compensation for AI talent.
“People keep hearing about crazy compensation packages from OpenAI and Anthropic,” Thorkelsson says, “about AI engineers making life-changing, generational amounts of money every year. In reality, only a tiny minority of people are getting that, but it’s influencing how the market as a whole thinks about compensating AI talent.”
He expects that over time, this gap will close and normalize. With the AI hype cycle currently underway, Thorkelsson is optimistic about how the overall talent market will play out in the coming year.
“I think we’re going to see a lot more hiring this year than we did last year,” he said. “Founders are going to be much more cautious about hiring than they have been in the past. We’re trying to give them the option to do that. How can we accelerate hiring while keeping our equity burn rate within acceptable limits?”
Yes, things are a bit weird right now, but if Thorkelsson is right, there’s reason to be optimistic about the startup talent market, even if that optimism is much grimmer than it used to be.
see you tomorrow,
Allie Garfinkle
twitter: Agarfinx
Email: alexandra.garfinkle@fortune.com
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Joe Abrams curated the Deals section of today’s newsletter.
Venture Transactions
– New York City-based supply chain management company Altana raised $200 million in Series C funding. Thomas Tull’s US Innovative Technology Fund led the round, with participation from March Capital, Generation Investment Management, Salesforce Ventures, existing investors and others.
– osapiens, a Mannheim, Germany-based ESG platform and provider of compliance and sustainability reporting solutions, raised $120 million in Series B funding led by Goldman Sachs.
– Marietta, Georgia-based Trio Mobil, a developer of AI and IoT solutions for workplace safety, raised $26.5 million in funding. The round was led by NewSpring Growth, with participation from existing investors 212 and TIBAS Ventures.
– Intelmatix, a Riyadh, Saudi Arabia-based company that provides AI-powered decision intelligence software for enterprises, raised $20 million in Series A funding. The round was led by Shorooq Partners, with participation from Saudi Venture Capital Company, Saudi Technology Ventures, Olayan Financing Company, and others.
– ZOE, a science and nutrition company based in London, UK and Boston, MA, raised $15 million in a Series B extension from Coefficient Capital.
– Rillet , a New York-based enterprise resource planning platform aimed at automating accounting, raised $8 million in seed funding led by Creandum and $5.5 million in pre-seed funding led by First Round Capital.
– Mountain View, California-based Sybill, an AI assistant that helps with B2B sales, raised $11 million in Series A funding. The round was led by Greycroft, with participation from existing investors Neotribe Ventures, Powerhouse Ventures and Uncorrelated Ventures.
– Monto, an AI-powered B2B payments service based in Tel Aviv, Israel, raised $9 million in seed funding. The round was led by Scale Venture Partners, with participation from Verissimo Ventures, F2 Venture Capital, Firsthand Alliance, and others.
– Clutch Security, a Tel Aviv, Israel-based non-human identity security platform, raised $8.5 million in seed funding. The round was led by Lightspeed Venture Partners, with participation from Merlin Ventures and angel investors.
– GovWell, a New York City-based government automation platform, raised $4.5 million in seed funding. The round was led by Work-Bench with participation from Bienville Capital.
– Axle, a San Francisco, California-based AI company that automates workflows for compliance teams, raised $2.5 million in seed funding. The round was led by Diagram Ventures, with participation from Mistral Ventures, Uphonest Capital, StreamingFast, and angel investors.
Unlisted stocks
– Genstar Capital-backed ACA Group has acquired Miami, Florida-based AI compliance software developer Encore Compliance. Financial terms were not disclosed.
– MiQ, backed by Bridgepoint Advisors, agreed to acquire Missoula, MI-based digital media partner Pathlabs. Financial terms were not disclosed.
– Secur-Serv, backed by Transom Capital Group, has acquired Shelby Township, Michigan-based managed services provider C-Net Systems.
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– Vital Energy (NYSE: VTLE) and Northern Oil and Gas (NYSE: NOG) have agreed to acquire Point Energy Partners, a Fort Worth, Texas-based oil and gas reservoir acquisition and development company, from Vortus Investments for total consideration of $1.1 billion.
– Brown & Brown has agreed to acquire Waardenburg, Netherlands-based insurance and pensions broker Quintes from Aquiline Capital Partners. Financial terms were not disclosed.
– Mortiam Holdings Inc. agreed to buy Northampton, Massachusetts-based BlueRock, a company that builds bridges, roads and other infrastructure, from Platinum Equity. Financial terms were not disclosed.
Funds + Fund of Funds
– Greenwich, Connecticut-based private equity firm Amulet Capital Partners has raised $1.2 billion for its third fund focused on companies in the health care sector.
– Philadelphia, Pennsylvania-based investment firm Siddhi Capital raised $135 million for its second fund focused on growth-stage companies in the consumer and food technology sectors.
