Startups Roll Out More Services For Growing Ranks Of Self-Employed And Gig Workers

Whether by choice or necessity, the share of workers who are self-employed or toiling in the gig economy continues to grow. And with it, tools to manage all the attendant accounting and job-finding burdens have been scaling up too.

Startups are taking a leading role. Over the past few quarters, venture investors have poured hundreds of millions into companies with offerings aimed at freelance and gig workers. Top focus areas include platforms for finding work, accounting tools and apps tailored for specific industries.

Using Crunchbase data, we assembled a sample of 35 companies funded in roughly the past two years. Collectively the group, listed below, have raised nearly $800 million to date.

Most of the funding centers around two themes: Finding jobs and managing finances. We’ll explore each of these areas in more detail below.

Job platforms

We’ll start with startup job-finding tools, many of which have become fairly niche-oriented.

The biggest fundraiser on our list is San Francisco-based Instawork, which focuses heavily on the hospitality industry, matching employers with short-term, seasonal and temp-to-hire workers. The 9-year-old company picked up $60 million in a May Series D round, bringing total funding to over $148 million.

Rival Qwick, another freelance hospitality platform, is also scaling up. The 7-year-old, Phoenix-based startup picked up $40 million in late 2022. Qwick pitches itself to workers in restaurants, catering and event venues as a way to choose shifts they want and get paid fast.

Funding rounds also reflect the fact that gig work is a global phenomenon. Paris-based Brigad, for instance, picked up a $30 million Series B last year to connect hospitality workers with jobs in France and the United Kingdom.

Meanwhile, Mexico-based Zubale, a service provider for e-commerce companies, has also been expanding its global footprint, snagging a $25 million Series A extension in November to help with the task. The company’s offerings include a service to connect retailers with freelancers who can pick, pack and deliver orders.

Finance

Startups are also picking up funding for offerings focused on helping freelancers manage their money.

Among them is San Francisco-based Collective, which bills itself as an all-in-one subscription financial tool for freelancers, covering services including company formation, accounting and payroll. Investors seem to like the concept, with the company locking up a $50 million financing last summer.

More recently Indy, a French startup offering online accounts, payment cards and accounting tools for freelancers, landed a $44 million Series C in November.

And, Hnry, based in New Zealand, raised $35 million a year ago for an accounting automation tool for freelancers, contractors and other self-employed workers.

Down market for deals

Like most startup funding sectors, freelancer-focused investment appears to be down quite a bit from the market peak a couple years ago.

Back then, we saw much larger rounds come to fruition, like the $500 million Series E for Madrid-based staffing platform Job&talent in late 2021. Freelancer-focused companies on the public markets were also flying high, with two of the leading platforms, Upwork and Fiverr, once supporting a combined valuation of nearly $20 billion.

But while the peak has passed, freelance platforms and services haven’t fallen entirely out of favor. Upwork and Fiverr had recent market caps around $2 billion and $1.1 billion, respectively. Though beaten down, these are still big enough numbers to indicate investors see value. Both companies also continue to post growing revenue.

Up market for gig and contract employment

There’s little consensus on the total number of workers worldwide, and even in the U.S., that qualify as gig or independent workers. However, most studies concur that the number is on the rise.

As of 2022, an estimated 36% of working Americans identified as independent workers, per a McKinsey survey. This marks a 25% increase from the last time they did an estimate in 2016.

Online gig work is a particularly high-growth niche, though, again hard to quantify. The World Bank recently estimated that the number of global online gig workers ranges from 154 million to 435 million and is increasing rapidly.

For startups focused on independent workers, seeing their ranks swell looks like a favorable indicator. For now, however, it looks like investors are still cautious about shelling out big rounds until we also see some attendant growth in startup valuations.