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Online Freelancing Platforms

The on-demand economy has finally reached white collar work.

Overview

Online freelancing platforms (OFPs), part of the human cloud market including online work services and crowdsourcing—are online labor marketplaces that match the individual supply of labor with demand for professional talent from business organizations. Leading OFPs are companies such as Upwork and Freelancer who broker direct work arrangements between professionals and businesses on their platform.

The platforms provide a diverse range of work categories from software and web development to writing and translation, video animation, and data entry. For skilled professionals who are no longer constrained by geographical proximity to work, OFPs can fulfill a desire for flexibility and a balanced lifestyle. For companies, online freelancing platforms are a cost-efficient way to gain access to professionals with specialized skills on an on-demand basis, providing them with flexibility based on project needs.

What's driving this industry?
Market Sizing

The global market size for online freelancing platforms is to reach USD 20.2 billion–34.7 billion by 2026

Conservative case

USD 20.2 Bn

Base case

USD 27.5 Bn

Expansion case

USD 34.7 Bn

USD billion010203040202120222023202420252026
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COVID-19 IMPACT

Covid-19 is driving growth in online freelancing platforms:

  • Upwork : In FY2020, gross service volume increased by 21% year-over-year (YoY) to USD 2.5 billion and revenue grew by 24% YoY to USD 374 million. Core clients increased by 17% YoY to around 145,000.

  • Fiverr : In FY2020, revenue grew 77% YoY to USD 190 million on the back of a 45% YoY increase in active buyers up to 3.4 million with a 21% increase in spend per buyer.  The platform reported elevated demand in e-commerce, content creation, and digital marketing categories.

Multiple freelancing platforms in creative, marketing, web development, and legal verticals finalized funding rounds backed by pandemic led tailwinds:

  • Braintrust raised USD 18 million in October 2020 as the platform experienced higher than expected growth due to the Covid-19 pandemic.

  • BOOM raised USD 7 million in Series A funding in October 2020.

  • Priori raised USD 6.3 million in Series A funding in October 2020. 

  • MarketerHire announced its USD 3 million seed round in October 2020.

  • Juggle raised USD 2.1 million in seed funding in November 2020.

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Market Mapping


Incumbents in the online freelancing platform space largely connect freelancers in multiple industry verticals. Likewise, a large number of top disruptors have taken a similar approach such as listed notable disruptors Upwork and Fiverr. Web, mobile, and software development is a popular vertical with a considerable number of pure players in the segment. This could be attributed to high demand for related work as communication and operations migrated to digital form. The design and creative vertical is home to a handful of disruptors in their growth stage with notable companies such as Snappr.

Incumbents
Growth
Early
Seed
Pre-Seed
Integrated verticals
?
Design and creative
?
Web, mobile and software development
?
Marketing
?
Writing / Translation
?
Other
?
Peopleperhour
Peopleperhour
Peopleperhour
Peopleperhour
Peopleperhour
Peopleperhour
The Adecco Group
Microsoft
Randstad
Cimpress
Guru.com
Robert Half International (RHI)
Malt
Upwork
Catalant
Fiverr.com
Instawork
iziwork
Freelancer Ltd
WorkGenius
Business Talent Group
Peopleperhour
CloudPeeps
Toptal
Workhoppers
Contra
Worksome
Graphite Solutions
Juggle
Tempo
Torre
AceBy, Inc
Terawork
1ZZP
Vigowork
Giggrabbers
GoProlancer
Virtual Gurus
Allobee
Gooby
AfriBlocks
KIWI
Backstage
YDX Innovation
Snappr
Storyhunter
Perfocal
Dribbble
Superside
Meaningful Gigs
Lancealot
Creatively
Andela
Braintrust
Comet
Gun.io
Distributed
Expertlead
Arc
Lemon.io
Codersera Inc
HireCoder
Cloud Devs
Collective
Teamway
Talimer
Passionfruit
MarketerHire
SellX
Growth Collective
HireBu
Textbroker
ServiceScape
WriterAccess
The Story Market
The Adecco Group
Nomad Health
IntelyCare
Ageras
Gale Healthcare Solutions
Priori
Field Engineer
LAWCLERK
kolabtree
A.Team
CareRev
Paro
UpCounsel
Lantum
Taxfyle
Weaver
Handiss
Procurement Freelancers
Continuum Technology
TempMee
YellowBird
Bounce

The Disruptors


A majority of disruptors focus on the breadth of offering

The companies dominating the online freelancing platform (OFP) space vary from newer startups to companies that have been in existence for just over a decade. Four of the disruptors identified were founded between 2008 and 2010, likely responding to demands post-financial crisis. Some platforms focus on diversifying their offering while others focus on one or two verticals, while gradually moving into more categories of work.

In terms of volume, Freelancer has shown the highest user numbers and jobs and offers a diverse product with over 1,800 categories as of August 2021. Fiverr offers work across more than 400 work categories in areas such as graphics and design, programming, health and wellness, and business, but has a higher take rate than Upwork across their 90+ work categories (March 2021). Among private companies, French startup Malt leads with the highest funding (USD 134 million) as of August 2021. Disruptors such as Toptal and Snappr have a specialized offering, focusing on software development and design and creative categories, respectively.

Integrated verticals

?

Disruptors

?
Funding in USD Millions
Upwork
Public - Market cap USD 1.5 bn
Fiverr.com
Public - Market cap USD 1.3 bn
Freelancer Ltd
Public - Market cap USD 91.9 mn
Malt
195
Catalant
146
Instawork
88
iziwork
68
Contra
45
WorkGenius
23
Worksome
23
Graphite Solutions
19
Business Talent Group
16
Peopleperhour
11
Tempo
10
Torre
10
CloudPeeps
0
Toptal
Unknown
Terawork
Unknown
Workhoppers
Unknown
Watchlist
?
Juggle
Virtual Gurus
Allobee
Gooby
AceBy, Inc
AfriBlocks
KIWI
1ZZP
Vigowork
Giggrabbers
GoProlancer

Design and creative

?

Disruptors

?
Funding in USD Millions
Superside
35
Snappr
13
Meaningful Gigs
7
Storyhunter
4
Perfocal
1
Dribbble
Unknown
Watchlist
?
Creatively
Lancealot

Web, mobile and software development

?

Disruptors

?
Funding in USD Millions
Andela
381
Braintrust
124
Comet
15
Gun.io
5
Arc
1
Cloud Devs
Unknown
Watchlist
?
Distributed
Expertlead
Collective
Teamway
Lemon.io
Codersera Inc
Talimer
HireCoder

Marketing

?

Disruptors

?
Funding in USD Millions
Passionfruit
5
SellX
4
Watchlist
?
MarketerHire
Growth Collective
HireBu

Writing / Translation

?

Disruptors

?
Funding in USD Millions
Textbroker
Unknown
ServiceScape
Unknown
WriterAccess
Unknown
Watchlist
?
The Story Market

Other

?

Disruptors

?
Funding in USD Millions
Nomad Health
218
IntelyCare
171
Ageras
144
Gale Healthcare Solutions
60
A.Team
60
CareRev
51
Paro
44
UpCounsel
30
Lantum
29
Taxfyle
27
Priori
21
Weaver
6
Field Engineer
3
LAWCLERK
Unknown
kolabtree
Unknown
Watchlist
?
Continuum Technology
TempMee
YellowBird
Handiss
Bounce
Procurement Freelancers

Upwork

Upwork is an online labor marketplace that assists in engaging freelancers and businesses in discovering direct labor arrangements for both short and long-term projects. Upwork’s roots date back to 1998 and 2003 when online talent marketplaces Elance and oDesk were founded. In December 2013, Elance and oDesk announced its merger with a combined freelancer base of over 8 million (5 million from oDesk and 3 million from Elance). Subsequent to the merger, Elance-oDesk continued to report losses and required a bailout package of USD 30 million from Benchmark Capital in November 2014. The company was rebranded as Upwork in May 2015.

In 2017, the platform reported that 20 work categories each contributed over USD 20 million in GSV, among them content marketing, business support, software development, and translation. Unlike its competitor Fiverr, Upwork encourages freelancers to offer services more closely related to one specific area of expertise. Further, Upwork allows clients to set the scope with the freelancers bidding for jobs as opposed to freelancers having the freedom to set the scope themselves. Upwork also provides freelancers access to personal payroll and healthcare benefits, in partnership with Catch , a portable benefits platform. In October 2018, Upwork was listed on the NASDAQ to raise approximately USD 187 million. 

The company introduced a new recruiting solution called Talent Scout (May 2021) to connect customers with pre-vetted freelancers selected by a panel of expert recruiters from Upwork. The service offers a more personalized solution that adds to multiple efforts by Upwork to facilitate a smooth hiring process for businesses including its Work Marketplace (launched in early May 2021) and Project Catalog (launched in November 2020). As of May 2021, Talent Scout is available to customers in the US, Canada, the UK, Australia, and Israel with additional countries added throughout the year. Upwork launched the “Virtual Talent Bench” (October 2021), a collection of features that enables businesses to build a network of freelance talent. The release allows clients to find new talent and reconnect with them for future projects through curated freelancer lists.

Funding and financials   

Upwork closed its offering of 0.25% convertible senior notes due 2026 for gross proceeds of USD 575 million in August 2021 while part of the proceeds is expected to be used for general corporate purposes including marketing, brand awareness and sales. Upwork has further plans to invest in working capital and M&A.

Upwork’s FY2021 revenue was up 34.6% YoY to USD 502.8 million, however, non-GAAP EPS remained almost flat at USD 0.06, compared to USD 0.05 in FY2020. Revenue growth was driven by a 41% YoY growth in gross services volume (GSV) to USD 3.5 billion. The overall take rate declined to 14.0% in Q4 FY2021 from 14.2% in the previous quarter and 14.6% in Q4 FY2020. This was attributed to the higher revenue growth in Marketplace revenue compared to Managed Services revenue (which has a 100% take rate) and a YoY decrease in the Marketplace take rate by 60 basis points. For FY2021, the gross margin improved by 90 basis points YoY to 73.0%, while the adjusted EBITDA margin slightly improved to 3.8% (vs. 3.7% in FY2020) and delivered a YoY growth of 36.4% YoY to USD 19.1 million.

In July 2022 , Upwork guided FY2022 revenue to USD 612 million–617 million, implying a 22% YoY growth at the midpoint.

Segment:
Integrated verticals
Total funding:
USD 168.8 million
Competitors:
Fiverr, Toptal, Freelancer, Instawork
Disruptor Funding History

Integrated verticals:

Upwork
Fiverr.com
Freelancer Ltd
Malt
Catalant
Instawork
iziwork
Contra
WorkGenius
Worksome
Graphite Solutions
Business Talent Group
Peopleperhour
Tempo
Torre
CloudPeeps
Juggle
Virtual Gurus
Allobee
Gooby
AceBy, Inc
AfriBlocks

Design and creative:

Superside
Snappr
Meaningful Gigs
Storyhunter
Perfocal
Creatively
Lancealot

Web, mobile and software development:

Andela
Braintrust
Comet
Gun.io
Arc
Distributed
Expertlead
Collective
Teamway

Incumbents


Traditional labor sourcing firms look to use a mix of M&A, innovation, and investments to adapt

The incumbent players are traditional HR staffing firms that provide staffing solutions in either managing or assisting businesses in their recruitment process. Some companies have taken the initiative to develop their own online platforms, whereas others have invested in some of the disruptors. For instance, the Adecco Group, a global HR solutions provider, launched Adia, connecting freelancers to businesses in partnership with Infosys. Microsoft’s acquisition of Linkedin in 2016 for USD 26.2 billion marked its entry into the realm of online freelancing platforms (OFPs).

Out of the incumbents covered here, Randstad is identified to have taken a particularly aggressive stance in using investments and acquisitions as a tool to grow its portfolio. Other entrants via acquisiton includes Vistaprint (owned by listed Irish company Cimpress) which acquired freelancer marketplace 99designs in October 2020. Backstage, a freelance marketplace for content creators announced the acquisition of two freelance marketplaces for creatives, StarNow and The Mandy Network in February 2021.

Integrated verticals
Design and creative
Web, mobile and software development
Marketing
Writing / Translation
Other
In House Development
M&A
Partnership
Investment
The Adecco Group
Microsoft
Randstad
Backstage
Cimpress
YDX Innovation
Guru.com
Robert Half International (RHI)

Notable Investors


No investor data is available

Funding data are powered by Crunchbase
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