Posted on Wednesday, Apr 1st 2015
According to a recent study by research firm Edelman Berland, more than 53 million people in the US are doing freelance work. That accounts for 34% of the country’s workforce. Billion Dollar Unicorn club member Elance-oDesk is helping this freelance workforce make their mark in the economy.
Mountain View-based Elance was founded in 1998 by IIT Bombay alumni Srinivas Anumolu, Sanjay Noronha, and Beerud Sheth. While working as a Wall Street trader, Beerud realized that there lay an opportunity to create marketplaces for services. He knew that there were millions of talented people worldwide who needed to be able to meet up with people who wanted their services. He leveraged his computer science background to lay the groundwork for Elance.
By 1999, Elance had their first prototype of the product out and conducted some transactions using the service. Since then, the growth hasn’t slowed. In December 2013, Elance merged with another freelance site oDesk to become Elance-oDesk. Today, Elance-oDesk is the global leader in helping connect freelancers with work. They have a community of over 3.7 million businesses connecting with more than 9.3 million freelance workers. Members are able to access more than 2.7 million jobs available on their sites annually. Elance-oDesk helps workers earn more than $900 million in annualized earnings.
The company earns revenues by charging a commission on work awarded through their site. Elance charges companies an 8.75% fee on the freelancer’s hourly rates, and oDesk charges a fee of 10%. Elance also operates a freemium-based model for their freelancers. The basic subscription to Elance is free and that allows users to bid for as many as 40 proposals to a client. For a fee ranging from $10 a month for individuals to $60 per month for large enterprises, users can access premium features such as the ability to add portfolio samples and bid for more work.
Their financials are not known, but analysts estimate that they would have earned $70.3 million in revenues in 2013 on billings of nearly $750 million. At the same ratio, they would have earned nearly $90 million in revenues on a billing of $900 million in 2014. Their profitability figures are not known.
Elance-oDesk have been venture funded so far and are expected to go public soon. Together, the two have raised $170 million from investors including Kleiner Perkins Caufield & Byers, New Enterprise Associates, Stripes Group, Pequot Capital, Citigroup, Focus Ventures, T. Rowe Price, Sigma Partners, Benchmark, Globespan Capital Partners, DAG Ventures, and SV Angel. Their last round of funding was held in November 2014 when they raised $30 million in a round led by Benchmark Capital at an undisclosed valuation. Elance-oDesk should be a multi-billion dollar business considering that the Australian freelance site Freelancer with annual revenues of a mere $18.8 million is currently valued at AUD 416.9 (~$320 million).
Elance-oDesk have a huge market potential considering that the freelance market is estimated to be worth $2 billion-$3 billion globally, and a very small portion of this market is online. Elance-oDesk plans to use their last funding for market expansion, especially in international markets. They want to expand in places like Northern Europe and parts of Asia.
More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion Dollar Unicorns. Unicorns will also be discussed with some special guests during our 1M/1M Roundtable programs over the next few weeks. To be a part of the conversation, please register here. The term Unicorn was coined in a TechCrunch article by Aileen Lee of Cowboy Ventures.
This segment is a part in the series : Billion Dollar Unicorns
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What is Okta's Inorganic Growth Narrative?