Where are the startups developing skills for the freelance and gig economies?
Where are the skills coming from to power the growing gig/freelance/shift economy?
Like the entry-level worker being asked for four years’ of work experience, it might seem like a parody, but freelancers and gig workers are expected to have the skills they need before they take on a job: they are not there to be upskilled. Yet the new entrants to the workforce, and those used to digital-first workplaces, are prioritising remote and project work over full-time jobs, and linear progression(1). Emblematic of this trend is that we’re beginning to see significant numbers choosing to enter the job market freelance-first — i.e. never onboarding into a company, but instead upon leaving school/college/university choosing to work on projects or gigs for a range of employers.
If this is where the market is going, where do people learn the skills they need to access the jobs they want? The answer is not currently found in the booming freelance or gig economy, but rather in the various mega-raises of the learning tech space. An example of this can be seen in freelancers wanting to learn one of the fastest growing coding languages (in terms of demand) such as Scala or Typescript(2) ; currently they have to do this outside of their project-work; skills development is “on your own time”. The $100m Seed round of Masterschool(3), is one of several significant coding school raises which highlights the market need for skills development accessed outside corporate training, further and higher education.
Only one of the freelance/gig economy company raises in Europe and North America in the past year, analysed by Ufi Ventures, had a significant skills development element to their platform.
(though if you’d like to contest this — do get in touch!)
The majority of the raises in this space were focussed on increasing the effectiveness and efficiency of matching workers to freelance jobs/shifts/gigs and the infrastructure to support these interactions.
In the past year funding in HRTech has moved on from the swathe of coaching and mentorship platform raises in early 2022, to the freelance and gig space which has dominated more recent rounds. May and August 2022 have been peak months for raising capital for this space. Over £62m was raised in August and over £665m in May, in North America and Europe. Neither figure includes undisclosed liquidity events — such as the acquisition of HireHand, by Reverence (4) in the UK, or Focus Cloud’s acquisition of Cognitive Group(5). Significant recent rounds have been into companies focussing on filling shifts in the warehousing, logistics, skilled trades and industrial sectors — such as France’s Iziwork’s €30m Series C(6) or the US’s Bacon Work’s $8m Series A(7).
Most notable though have been growth in raise amounts of the “gig infrastructure” — those companies providing secondary services to gig job boards or freelance workers. Most recently US-based AllWork raised $3m in November to continue to build tools to allow companies to effectively manage their freelance workforce — including budgeting, timesheets, contract management and benefits. USA and Israel-based A.Team’s $55m Series A highlights a development in the traditional gig model — it recruits project teams, rather than individuals. Estonia’s gig insurance broker and provider Cachet raised a €5m Series A to scale the range of insurance models and cover it can provide to on-demand taxi drivers, food delivery agents and other vehicle-based freelance workers(8). Fintech’s catering for the self-employed, through innovative services such as credit for smoothing uneven months of pay, or reduced or removed credit checks, or even facilitating purchase of stock in their employer (eg Uber) have also seen significant traction — such as Found’s $60m(9) Series B or the c. £4m Series A raises of Moves(10) and SteadyPay(11). Though companies like the A.Team or JobGet, who raised $42m in June 2022 for their social network and job board for gig/shift/freelance workers, could allow freelancers to rate or lobby employers (perhaps for more training) almost none of these ancillary companies are supporting the gig economy to maintain and grow the skills base it draws from.
At Ufi VocTech Trust we look to support, through grant and equity funding, the companies who are training the workforce of tomorrow and helping individuals access good quality work. It is encouraging that the gig/freelance market is maturing, with companies being created that cater to the needs of the existing gig economy. We hope that as this market develops we will see companies emerge (or pivot or diversify) to cater to the evident upskilling, re-skilling and training needs in this space. Given the scale of gig economy companies currently, such as JobandTalent ’s recent raise of €230m debt(12) or well-known listed gig companies, the commercial need for services in this sub-sector and exit opportunities are increasingly clear.
Yet the skills factor and / or needs of the gig worker have to be there for Ufi to get involved, and we’d like to see more opportunities in this area. The only notable recent activity has been GoJob’s €23m raise in September(13), which combines a “temporary staffing” job board for logistics and manufacturing with free online courses for improving career skills and thinking about career progression.
Recent raises don’t show the work that’s being done “in stealth mode”, through angel networks or many of the pivots that happen in early-stage companies. So we’d very much like to hear from you if you’re bridging the skills gap in the freelance/gig/shift economy.
