Private equity giant Carlyle is taking a majority stake in a startup that uses AI to judge how much you smile in interviews - and it could be the future of recruiting

REUTERS/Jonathan Ernst

The Carlyle Group co-founder David Rubenstein.

• Private equity giant The Carlyle Group said on Tuesday it agreed to buy a majority stake in HireVue, a company that makes video and AI software for employers to screen job applicants.
• Carlyle can provide HireVue access to its technology advisers and introductions to Carlyle-owned companies that are possible customers.
• HireVue counts more than a third of the Fortune 100 as customers, including Intel, Goldman Sachs, and Hilton.

Private equity giant The Carlyle Group is betting that big companies will increasingly adopt artificial intelligence to help make hiring decisions.

The firm said on Tuesday it had agreed to purchase a majority stake in HireVue, a company that lets employers screen job applicants through video interviews and recorded question-and-answer sessions designed to detect strengths and weaknesses.

Financial terms were not disclosed, but Carlyle will control HireVue's board. Existing shareholders Technology Crossover Ventures (TCV), Granite Ventures, and Sequoia Capital will remain as minority investors, the companies said in a joint statement.

The deal comes as big companies are increasingly looking to remove bias from hiring decisions and find new ways of reaching qualified job applicants.

HireVue, founded in 2004 in Salt Lake City, has raised over $90 million in venture capital investment and counts more than a third of the Fortune 100 as customers, including Hilton, Goldman Sachs and Intel. It says it uses 25,000-plus data points when screening applicants, including whether or not they smile, body language, and word choices. The software claims to reduce the time it takes to hire a candidate by 90 percent on average, while leading to better hires overall with improved diversity.

Read more: Elizabeth Warren's attack on private equity could have a surprising group of backers: Investors in private equity

Goldman Sachs changed its approach to college recruiting in 2016, and has said it used HireVue rather than first-round interviews on undergraduate campuses to attract a broader array of candidates beyond Ivy Leaguers.

Patrick McCarter, co-head of Carlyle's technology, media and telecom group, said he was so impressed with the software that he reached out to HireVue CEO Kevin Parker earlier this year through a mutual connection at investor TCV. From there, a May breakfast meeting was scheduled in Palo Alto where the pair discussed HireVue's future.

For HireVue, Carlyle has an existing network of technology advisers and 277 Carlyle-owned companies, at least some of which they hope to convert to HireVue customers. Carlyle isn't yet a HireVue client itself, but that may soon change, McCarter said.

Already, Carlyle has made HireVue introductions to several of its own companies and HireVue has provided demos of its product, according to a person familiar with the matter. The private equity firm also intends to tap its relationships with consultancies, law and accounting firms, this person said.

Read more: Private-equity giant Carlyle just used an unusual approach to clinch a big-time music deal with Rascal Flatts and Taylor Swift

One advisor HireVue may find helpful is Terry Myerson, a former senior Microsoft executive who led the development of Windows, Surface, Xbox and Exchange. Myerson joined Carlyle last year as an operating executive and works with its companies on developing and executing technology strategies.

The existing management team at HireVue will stay intact, Parker said, with additional board seats to be given to Carlyle executives. Exactly how many and who will assume responsibilities has yet to be determined.

The equity capital for the investment will come from Carlyle Partners VII, the firm's largest-ever fund at $18.5 billion, which began investing last summer. The fund's focus is on majority and strategic minority investments throughout the United States.

Goldman Sachs acted as exclusive financial advisor to HireVue.