Vangst is paying another $19 million to place employees with work in the growing cannabis industry
In a tight labor market, so-called vertical labor markets that focus on one industry, such as nursing or hospitality, attract funds. Trusted Health, a healthcare staff recruitment platform, has raised $149 million in financing in November, for example. Seasoned, a hiring platform for restaurant workers, closed for almost $19 million around the same time.
Investors are also betting there are plenty of upsides in a hiring platform focused entirely on the fast-growing cannabis industry, in which it is estimated 320,000 people were already working last fall, an increase of 32% over the previous year.
Indeed, a syndicate of investors Led by Level One Fund Just Connected $19M in Series B Funding Into Vangst, a six-year-old Denver-based team that matches both short-term workers and full-time employees with job openings at cannabis companies across the United States. revenue streams it has created.
According to founder and CEO Karson Humiston – who started the company as an undergraduate at St. Lawrence University – Vangst currently offers 500 “gigs” a week that the platform takes an average of 48 hours to complete. fill. (Vangst treats these people as W-2 employees and pays them through its own payroll.) It also currently offers nearly 2,000 full-time positions that represent $85 million in gross salaries.
It can start to add up financially. Vangst charges its customers 50% more than it pays its part-time employees, so by paying $15 per hour, it can charge a customer $22.50 for that employee’s time. For full-time positions, in exchange for screening talent that it matches with companies, Vangst takes a percentage of each candidate’s first-year salary.
Vangst also charges employers monthly and yearly subscriptions for the privilege of posting as many openings as they need to fill and more recently he has started building a content business that includes modules on retail roles and other positions in the cannabis industry than these. new to the industry might not understand. (Not everyone knows what a mower does.)
It hasn’t all been a bed of rosettes for Humiston and his team. Although Vangst gained momentum after his Series A round, which ended in $10 million in 2019, like many other recruitment companies, it was hit hard by the immediate ripple effects of the coronavirus. In March 2020, Humiston says, Vangst was forced to lay off half of its 70-person team as its customers cut their own payrolls and began operating at 50% of their previous capacity.
In fact, it was because of Vangst’s declining income that she decided to venture into placing full-time, salaried candidates in roles. Think accounting managers, product managers, and software engineers. “That was kind of our COVID strategy,” she says.
Gradually, when business rebounded, Vangst had built up a whole new volume of business, Humiston says.
Now the challenge is no longer demand but supply. Like almost every other employer in the United States, Vangst, which has 56 employees, works hard to find people to fill the positions on its platform, including attending trade shows and spending money on SEO services. .
Part of its new funding round will be used to build its small marketing team, unsurprisingly.
In the meantime, Vangst’s own customers have to soften their terms in many cases in order to get help. As Humiston says, “We encourage them to pay above minimum wage” and to “show their mission, their values and the benefits they offer.”
The good news: many more new jobs are expected to be created, which should bode well for Vangst when the labor market recovers.
New York State, for example, legalized recreational use of cannabis last September, and although it is still in the process of handing out retail licenses, this decision should open 60,000 new jobs, according to former New York Governor Andrew Cuomo.
Last fall, New Jersey also enacted three bills that license and regulate the recreational use of marijuana, and businesses are already opening up to them.
That says nothing of Michigan, which is “growing extremely rapidly right now” as a market, Humiston says. (Vangst also has clients in Colorado, California, Nevada, and Arizona, among others, who have already embraced recreational marijuana. There are currently 18 states quite where it is legal.)
Eventually, Humiston says, Vangst also hopes to go international. To that end, he plans to spend time in Barcelona with one of his investors, Casa Verde Capital, which is pouring more money into European startups these days.
The team has a lot to master first, she suggests. ” Like here [in the U.S.], where we had to learn a lot about business needs and regulatory aspects, we look forward to learning more about international markets. We are beginning this exploration process this spring. »