Handshake, a LinkedIn for university students and diversity, raises $40M

LinkedIn has created and — with 562 million users — leads the market in social platforms for people who want to network with others in their professions, and look for jobs. Now a startup that hopes to take it on in a specific niche — university students and recent grads, with a focus on diversity and inclusion — has raised a substantial round to grow. Handshake, a platform for both students looking to take their early career steps and employers who want to reach them, has raised $40 million in a Series C round of funding, after hitting 14 million users in the U.S. across 700 universities, and 300,000 employers targeting them.

The company is now valued at $275 million post-money, according to figures from PitchBook, a big leap on its valuation at the Series B stage two years ago, when it was valued at $108 million. Handshake says the number is not quite right: “While we don’t disclose valuation, I wanted to share that the Pitchbook number isn’t accurate.” I’m trying to get more…

The funding is notable not just for that valuation hike — and the implication that many think it could give Microsoft-owned LinkedIn a run for its money among 20-somethings — but for who is doing the backing.

The round was led by EQT Ventures, the investment arm of European holding company and PE firm EQT, with participation also from several investment organizations that have put a focus on backing interesting startups in the education sphere, including the Chan Zuckerberg Initiative, Omidyar Network, Reach Capital; as well as True Ventures, Kleiner Perkins, Lightspeed Venture Partners, Spark Capital and KPCB Edge. Several of these are repeat investors and the total raised by Handshake — not to be confused with the B2B e-commerce platform of the same name — to $74 million.

To date, Handshake has only been active in the U.S. The company was founded in 2014 originally named Stryder by three graduates of Michigan Tech University University of Michigan — Garrett Lord (currently the CEO), Scott Ringwelski (CTO) and Ben Christensen (a board member). The plan is to use the new funding to expand into more markets like Europe, using EQT’s network of businesses in the region to help it along.

LinkedIn has been making a lot of efforts over the years to court younger users and bring them into the LinkedIn fold earlier.

In 2013, the company lowered its minimum age for users to 13 and launched dedicated pages for universities. In 2014, LinkedIn started to add in more tools for younger users to connect with universities and their university-related networks on the platform. And through various e-learning efforts, LinkedIn has been trying to create a bridge between the kind of learning you might do at university, and what you might do after you leave to further your career.

The behemoth also started to take baby steps into providing more insights into diversity for those doing hiring, by letting recruiters examine search results by gender; and by providing bigger insights into the wider pool of people on LinkedIn.

Part of the reason for the baby steps, I’m guessing, is that LinkedIn simply lacks the data from its users to do more faster, and so that leaves a lot of room for a rival to step in.

In that vein, it seems Handshake is trying to position itself as a platform that is considering and thinking about how to address diversity from the ground up, as a native part of its platform while it is still small and growing.

One of the ways that Handshake gets more details about its members is through its partnerships with universities, which helps to populate information about their profiles, rather than relying on a person filling out the details manually. (To register for an account, you use your university address, similar to how Facebook worked when it first launched.)

Handshake also has relationships with more than 100 minority-serving institutions, which include Historically Black Colleges and Universities, and Hispanic Serving Institutions in the U.S., to bring them and their students more closely into that fold.

On the side of employers, it includes more search features for recruiters to search using more specific parameters in the effort to make more diverse hiring choices. “Candidates who might not have the right connections or privileged background can get in front of Fortune 500 companies,” the company notes.