In a tight labor market, so-called vertical labor markets that zoom in on one industry, such as nursing or hospitality, are gaining funding. TrustedHealth, a healthcare staffing platform, raised $149 million For example, in funding in November. CZ, a recruitment platform for restaurant employees, closed in on about $19 million around the same time.
Investors are similarly betting that a recruitment platform focused solely on the fast-growing cannabis industry is turning upside down, with one predictable 320,000 people were already operating as of last fall, an increase of 32% compared to a year earlier.
Actually, one Investor Syndicate Just $19 million invested in Series B funding led by Level One Fund Hold, a six-year-old, Denver-based organization that connects both short-term workers and full-time employees with job openings at cannabis companies around the US. Revenue streams have been created.
According to founder and CEO Carson Humiston — who launched the company as a graduate student at St. Lawrence University — Wangst currently features 500 “gigs” per week, which the platform takes an average of 48 hours to fill. (Wangst treats these individuals as W-2 employees, and pays them through its own payroll.) It currently has about 2,000 full-time positions that represent $85 million in gross pay.
It can start to add up financially. Wangst charges its customers 50% more than it pays its part-time employees, so paying $15 per hour, it can charge the customer $22.50 for that employee’s time. For full-time roles, Wangst charges a percentage of each candidate’s first year salary, in exchange for screening talent that companies join with.
Wangst charges employers the privilege of posting both monthly and annual subscriptions to as many openings as they need to fill and most recently, it began building a content business that includes retail roles in the cannabis industry. And other posts include modules about what people new to the industry can immediately understand, like, say, what the role of a trimmer is involved in.
All this hasn’t been the bed of rosettes for Hamiston and his team. Although Wangst had gained momentum after its Series A round, which closed in 2019 with $10 million, like many other hiring businesses, it was hit hard by the immediate ripple effects of the coronavirus. In March 2020, she says, Wangst was forced to halve its then 70-person team as its clients reduced their own payroll and began operating at 50% of their previous capacity.
In fact, it was because of Wangst’s declining revenue that it decided to jump into the business of hiring full-time salaried candidates in the roles as well. Think accounting managers, product managers and software engineers. “That was like our COVID strategy,” she says.
Gradually, when business returned, Wangst had created an entirely new book of business, Humiston says.
Now the challenge is supply, not demand. Like nearly every other employer in America, Wangst, which has 56 employees, is working hard to find people to fill roles on its platform, which include attending trade shows and spending money on SEO services. .
A portion of its new funding round will surprisingly be used to build its own small marketing team.
Meanwhile, Wangst is having to sweeten its terms on several counts to get the help its customers want. As Hamiston puts it, “we encourage paying them above minimum wage” and “to show their mission and values and the perks they offer.”
The good news: Many more new jobs are expected to come online to fill, which should bode well for Wangst when the labor market gets its feet again.
For example, New York State, valid Recreational cannabis use last September, and although it is still in the process of eliminating retail licenses, that decision is expected to open 60,000 new jobs, according to former New York governor Andrew Cuomo.
Last fall, New Jersey also signed into law three bills that allow and regulate the use of recreational marijuana, and businesses are already opening there.
That’s not saying anything about Michigan, which as a market is “growing very fast right now,” Humiston says. (Wangst also has customers in Colorado, California, Nevada, and Arizona, among other places that have already adopted recreational marijuana. Currently there are 18 states Totally where it’s legal.)
Eventually, Hamiston says, Wangst hopes to go international as well. Toward that end, Barcelona has upcoming plans to spend time 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 offers. “As here [in the U.S.], where we had a lot to learn about business requirements and regulatory material, we look forward to learning about international markets. We’re starting that exploration process this spring.”