Fiverr has now joined the most highly funded companies in the work intermediation platform (WIP) space. The freelance marketplace platform, founded in 2010, announced a $60 million financing round Wednesday led by Square Peg Capital, along with existing investors Bessemer Venture Partners, Accel and Qumra Capital. This is the sixth round of financing in five years, bringing the total private equity funding to a stunning sum of $110 million.
The company began as an Israel-based startup, and it now has major offices in the U.S.A. It has often been incorrectly regarded as a not-so-serious player in the fast expanding freelance marketplace sector. Certainly this funding round is going to turn some heads and open some eyes to examine what Fiverr has really been about.
We have been in a position to follow Fiverr over the past few years. In this article, we provide a quick summary of the funding event and recent Fiverr developments discussed in the announcement. We will follow up next week with a more in-depth analysis of Fiverr and its perhaps surprising significance for services procurement.
In a Nutshell
Because of its low-end pricing restrictions on what sellers could charge buyers for their online deliverables, Fiverr came to be mistakenly thought as a down-market player, what we might call a kind of dollar store for online freelancer tasks. Contradicting that perception, Fiverr says it is shaping the future of work by shifting the freelance economy online.
In the press release, Fiverr describes itself as the worlds most transacted marketplace for digital services, saying “Our horizontal marketplace provides nearly any digital service in just one click.” Its buyers can choose from the worlds largest catalog of pre-packaged services ranging from graphic design to music/video editing to marketing and copy-writing. Fiverr also states that Fiverr sellers looking to make extra cash have delivered millions of high-quality Gigs from 100+ categories of services, and across 196 countries. Elsewhere, the company states that it generates close to 1 million digital transactions per month.
The recent announcement focused on the new investment round, and it also brought visibility to the formal launch of what has been an observable, gradually emerging strategy of moving up-market and supporting/encouraging productized service offerings/packages.
The press release explains that, for the first time, all freelancers on Fiverr will soon be able to set their own prices rather than be required to start them at $5.
Over the next several weeks, Fiverr also will be introducing easy-to-understand Gig Packages across several pricing tiers, which will simplify the way freelancers or Fiverr sellers price and bundle services, it said in the press release. The new Gig Packages will also help Fiverr sellers pocket more cash, create greater value for buyers, and make sellers nimble enough to compete for larger projects from SMBs, entrepreneurs and even corporate marketing departments. Fiverr will continue to roll out the bundled Gig Packages and other new value-added services and during 2016.
Cracking the Nut
Its clear from the announcement that Fiverr is now taking the wraps off of its longer-range strategy, which when you step back and look at it, starts to seem very much like a classical Clayton Christensen disruption play: entering at the low end of the market, establishing an innovative model and moving upward.
Coming out swinging, Fiverrs CEO, Micha Kaufman, said “This funding from new and existing partners will help expand our geographic footprint, compete for new talent, add innovative new features and more aggressively grow our company, potentially by acquiring other businesses in our space.”
And in case there is any doubt about a long-term vision and strategy at work over the past years at Fiverr, it’s interesting to go back to 2012, when Kaufman told TechCrunch, ‘Our vision is to turn Fiverr into the eBay for the service economy.’ Kaufman wasn’t pulling any punches back then, and now we can see that investors are not only attracted by the usual elements of a talented team and ability to execute but also by what appears to be clear vision and compelling strategy.
In other words, despite appearances, Fiverr is not a black swan.
Perhaps, surprisingly to some, Fiverr is now coming into focus as a significant, innovative player in the freelancer WIP space. In this context, we will be returning with a research brief providing a more extensive analysis of not only the Fiverr strategy but, perhaps more importantly, how what Fiverr is doing is directly relevant to services procurement.