In a tight job market, so-called vertical job markets that focus on one sector, such as nursing or hospitality, are attracting funding. Trusted Health, a platform for healthcare professionals, has increased $149 million in financing in November, for example. Seasoned, a restaurant employee hiring platform, closed at nearly $19 million at about the same time.
Investors are also betting that there are many upsides to a hiring platform focused entirely on the fast-growing cannabis industry, which is estimated to have 320,000 people were already up and running last fall, up 32% from the year before.
Indeed, a investors syndicate led by Level One Fund just put $19 million in Series B funding into Vangst, a six-year-old Denver-based company that matches short-term workers and full-time employees with job openings at U.S. cannabis companies. revenue streams it has built.
According to founder and CEO Karson Humiston – who launched the company while a graduate student at St. Lawrence University – Vangst currently offers 500 “shows” a week that the platform takes an average of 48 hours to fill. (Vangst treats these individuals as W-2 employees and pays them through its own payroll.) It also currently has about 2,000 full-time positions representing $85 million in gross salaries.
He can start adding up financially. Vangst charges its customers 50% more than it pays its part-time employees, so paying $15 an hour can charge a customer $22.50 for that employee’s time. As for full-time positions, in exchange for verifying talent that connects with companies, Vangst receives a percentage of each candidate’s first-year salary.
Vangst also charges employers monthly and yearly subscriptions for the privilege of posting as many jobs as needed, and more recently, it has begun building a content business that includes modules on retail roles and other positions in the cannabis industry that people are new to industry can immediately understand, like, say, what the role of the trimmer involves.
It hasn’t all been rosy for Humiston and his team. While Vangst gained momentum after the Series A round, which closed with $10 million in 2019, like many other hiring companies, it was hit hard by the immediate effects of the coronavirus. In March 2020, she says, Vangst was forced to lay off half of its 70-person staff as its customers reduced their own payrolls and started operating at 50% of their previous capacity.
In fact, it was because of Vangst’s dwindling revenue that she decided to get into the business of putting full-time salaried candidates into roles as well. Think accounting managers, product managers, and software engineers. “That was sort of our Covid strategy,” she says.
Gradually, as business recovered, Vangst built an entirely new portfolio of businesses, says Humiston.
Now the challenge is no longer demand, but supply. Like almost every other employer in the US, Vangst, which has 56 employees, is hard at work finding people to fill roles on its platform, including attending trade shows and spending money on SEO services.
Some of your new funding round will be used to build your small marketing team, unsurprisingly.
Meanwhile, Vangst’s customers themselves have to sweeten their terms in many cases to get help. As Humiston says, “We encourage them to pay above the minimum wage” and to “show their mission and values and the perks they offer”.
The good news: many more new jobs are expected to be filled online, which should bode well for Vangst when the job market takes hold again.
The state of New York, for example, legalized recreational cannabis use last September and while still in the process of distributing retail licenses, this decision is expected to open up 60,000 new jobs, according to former New York Governor Andrew Cuomo.
Last fall, New Jersey also passed three bills that would allow and regulate recreational marijuana use, and companies are already opening there.
Not to mention Michigan, which is “growing extremely fast right now” as a market, says Humiston. (Vangst also has customers in Colorado, California, Nevada, and Arizona, among other places that have already embraced recreational marijuana. 18 states completely where it’s cool.)
Eventually, says Humiston, Vangst also hopes to go international. To that end, it has plans to spend time in Barcelona with one of its investors, Casa Verde Capital, which is investing more money in European startups these days.
The team has a lot to master first, she delivers. “Like here [in the U.S.], where we had to learn a lot about business needs and regulatory affairs, we are eager to learn about international markets. We are starting that exploration process this spring.”