Depending on who you ask, recent reports suggest that somewhere between 50 to 80 percent of recent college graduates are unemployed and looking for work. According to Accenture, about half of graduates who are lucky—or dogged—enough to find work are “underemployed,” working in jobs that don’t require a college degree. Yet our nation’s largest employers, hungry for qualified candidates, bemoan lengthening time to fill key positions and a skills gap that creates competitive risk and limits growth. The challenge is, at its core, less an economic problem than a matching one.
Despite the bleak outlook for students, most colleges and universities aren’t playing the matching game. The role of higher education, they argue, is to prepare students for their fifth job—not their first. But this argument is losing steam as employers, parents and policymakers increasingly question the value of the degree, and students are faced with a panoply of nontraditional educational alternatives on the path to employment.
As it turns out, the college-to-employment market failure has created a boon for dozens of technology firms that promise to better match would-be workers, including recent college graduates, to employers with an appetite for talent. Today’s talent matchmakers aren’t involved, with limited exceptions, in making actual hiring decisions. But they are adapting technologies pioneered in online dating to screen and qualify students for jobs. The goal is fewer false positives and false negatives for human hiring managers as they sift through the keyword-driven filtered results of legacy Applicant Tracking Systems.
As a result, matching students to jobs is now one of the most active areas of private equity investment in education. Our firm, University Ventures, has made four such investments in the past year. As an introduction to this emerging sector, we’ve prepared a market map of companies focused on matching talent with entry level positions that we hope is helpful. Here’s a quick explanation.
On the X-axis we’ve mapped the companies by stage of investment. Because these are all private companies, data isn’t readily available on their size—let alone number of students, colleges or employers using their services. So we use stage of investment as a proxy.
- Bootstrapped companies are being funded by the entrepreneurs themselves (and their friends and families).
- Seed-stage companies have received limited investment from institutional investors.
- Companies at the Series A stage and beyond have received millions of dollars from institutional investors, like ours.
On the Y-axis we’ve mapped the companies in order of perceived quality of match. Quality depends on how much information employers are getting on candidates: The more information the employer receives, and the more relevant the context in which that information is received, the greater the accuracy. The categories from what we believe to be lowest to highest accuracy of match are:
- Job Boards—increasingly catering to new college graduates, focused on entry-level positions across professions.
- Freelance Marketplaces—responding to the appeal of the gig economy to recent college grads.
- Advanced Job Boards—ask for more than résumés in order to make a match; some through automated prompts others via telephone interviews.
- Career Discovery—platforms that gather additional information on students via behavioral or personality questions and in some cases use predictive analytics to suggest career paths.
- Natural Language Processing, Machine Learning or Artificial Intelligence—companies that utilize algorithms to parse and extract competencies from résumés and work samples, or that utilize artificially intelligent “bots” to interact with students and surface additional competencies.
- Competency Identification—new entrants that surface competencies via microcredentials, ePortfolios and competency-based assessments.
- Games and competitions—companies that develop and deploy skills-based competitions for employers; winners are considered good matches and passed through to employers.
- Case studies or short courses—purpose-built short courses for specific industries or employers, allowing employers to view student work in real time. Courses can be as short as LearnUp’s 10-minute modules, or as long as Qubed’s 10-week certificate in fashion industry essentials.
- “Last-mile” training and hiring—talent development companies like Revature that provide some amount of “last-mile” training and then hire students in order to place them with clients.
So who will win the race to match student with employers? Quality of match matters. But to get employers enthused, platforms need students. To engage students, they need employers. But the apotheosis of student-job matching is the marketplace that matches students to jobs and postsecondary education opportunities on the basis of competencies. To date, LinkedIn is far and away the leader in building the market—or, what LinkedIn CEO Jeff Weiner calls the “economic graph.” But the companies on our market map are betting on the fact that the number of college students actively using LinkedIn is still relatively low.
Regardless of who wins, the categories and companies that win this race are likely to become highly relevant to colleges and universities over the next few years. It will be exciting to watch, and beneficial to millions of students.