WorkStep, a Portland, Oregon-based jobs platform designed to facilitate worker hiring and retention in the logistics and industrial sectors, said Wednesday it has landed $17 million in funding.
The capital infusion consists of $6.7 million in seed capital that was actually provided in 2017 and $10.5 million in Series A funding that was recently supplied, WorkStep said. The latest round was led by FirstMark Capital, which had also provided the seed financing, WorkStep said. Prologis Ventures, a unit of logistics warehousing giant Prologis Inc. (NYSE:PLD), also participated in the Series A funding. The Prologis unit first invested in WorkStep in 2018.
WorkStep said it will use the proceeds to more than double the size of its engineering, product, sales and customer success teams.
WorkStep’s platform uses algorithms to match companies with prospective workers who have been pre-vetted and screened. Its software then learns from these datasets to understand what type of labor works best for a specific employer over time, WorkStep said.
Workstep was co-founded by Dan Johnston, a former warehouse manager with long experience in dealing with legacy staffing solutions that were not tech-centric and typically involved the use of expensive temporary staffing agencies and piecemeal in-house efforts. Johnston is also the company’s CEO.
Last fall, WorkStep launched an initiative called Retain to help supply chain employers increase frontline workforce retention by automating employee engagement, identifying top opportunities to reduce turnover and enabling clients to measure progress. According to the company, the initiative has reduced turnover by up to 29% and has saved customers millions in replacement and retraining expenses during the most turbulent year for distribution center activity in American history.
Avoiding labor turnover has become a priority for businesses as demand for qualified warehouse workers accelerates due to the growth of e-commerce fulfillment. In addition, worker wages, which stagnated badly from 2002 to 2014, have been on a multiyear rebound since the middle of the last decade. Much of that is due to Amazon.com Inc. (NASDAQ:AMZN), which has been on a fulfillment-center buying spree and vacuums up local labor by paying above-market wages.
If fourth-quarter numbers released Wednesday by real estate services company CBRE Services Inc. (NYSE:CBRE) are any indication, WorkStep will stay busy well into 2021 and beyond. The U.S. industrial real estate market, composed mostly of logistics facilities but which also includes manufacturing, posted its strongest quarter in history, according to CBRE data. A record 104 million square feet was absorbed in the quarter, bringing the full-year total to 225 million square feet, an 11.8% increase over 2019. Asking rents for industrial space jumped to $8.24 per square feet in the fourth quarter, a number that many industry veterans probably never thought they’d see.
For the year, developers completed 264.7 million square feet of industrial construction, up 9.5% from 2019. Despite all this development, the industrial vacancy rate remained at historic lows at 4.6%, barely budging from rock-bottom 2019 levels, CBRE said.
“Industrial real estate enters 2021 with momentum. E-commerce and the need for safety stock to counter potential supply chain disruptions is fueling strong demand,” the report said. “This will further push up asking rents and keep vacancy rates near record lows despite a large amount of new development coming online.”