The “Great Resignation” has defined the trend of U.S. workers quitting jobs at a record pace. But the future of work is being reshaped by the “Great Reimagination.”
As employees are breaking out of the 9-to-5 paradigm, they increasingly want to work on their own terms, with flexibility and autonomy in roles that have meaning for them.
This shift started before the pandemic, but Covid-19 accelerated it as people moved en masse to remote working and liked what they found, including a healthier work-life balance and freedom from long commutes. This dynamic has led to an increasing number of workers joining the gig economy and seeking freelance opportunities.
Something less heralded, but perhaps just as significant, is under way among employers as they seek the greater flexibility and scalability that can be achieved by leveraging remote “on-demand” workforces.
As Fortune put it in an article last year: “the side hustle finally got promoted … to the C-suite.”
Between these two powerful forces is a large and growing opportunity for digital-talent platforms that can provide regular projects for independent workers and a pool of high-caliber talent that companies can access as needed. And private-equity firms are taking notice of this latest twist on the on-demand labor market.
Labor matchmaking isn’t new. Temp agencies have been around for decades, and over the past decade freelance talent networks such as Upwork
have successfully tapped into the trends of outsourcing and using more freelance talent.
What’s changed now, though, is that remote, flexible working and freelance status have gone mainstream in the U.S. and will increasingly dominate how people find jobs and how companies locate talent.
Some 53% of businesses say that remote work has increased their willingness to use freelancers, while 71% of surveyed hiring managers plan to sustain or increase their use of freelancers in the next six months, according to Upwork’s 2021 Future Workforce report. The number of freelance workers in the U.S. grew to 59 million in 2020 — before the full effect of the pandemic was felt — up from 53 million in 2013.
Some of the key markers that will make platforms attractive to investors include how well their tech is differentiated to match talent with opportunities, how strong a community they are able to build among freelancers, their ability to build vertical expertise, and how well they can establish a reputation for performance among clients and win repeat business.
We worked on a transaction last year involving We Are Rosie, an online platform for freelance marketers, that was able to tick all of those boxes and more, attracting a major investment from Align Capital Partners in a deal valuing it at $110 million.
Calling itself a “community home for corporate refugees,” the company has won dozens of enterprise customers, including Facebook. We Are Rosie reported tripling its revenue in the past year. The company puts a high priority on strengthening its community of over 10,000 “Rosies,” and encourages diversity and inclusion by spurning traditional resumes in favor of an assessment that uses a wide range of data points and considers an individual’s passion and purpose.
The Mom Project, a recruitment firm focused on mothers, raised over $80 million in Series C funding last year. The company reported its revenues grew 20-fold in the past three years as it rides the trend that saw over 3 million U.S. women leave the workforce in the wake of the pandemic. Working Solutions, another female-led business, has been around for much longer and has become a leading marketplace firm for remote sales and branding talent.
Contra, a professional network for independent workers, raised $30 million in new funding last year led by NEA, a global VC firm. And Wonolo, a platform for temp workers to find jobs, received $140 million in a new round of funding last year based on its growth.
Almost any professional-services field is a candidate for this model, from accounting to legal to financial services and even architecture and engineering.
This suggests that we are still early in the evolution of talent tech, with plenty of scope for new platforms to grow and deliver solutions to meet the demands of companies and workers across a whole range of industries.
Companies that can facilitate matches in the search for talent and opportunity are going to be hot for the foreseeable future.
Mike McGill and Tara Smith are managing directors, Strategic Capital, at Cowen and Co. LLC.