Lili Raises $55M to Support Freelancers

A Neobank Focused on Freelancers Secures $55 Million in Funding

A fintech startup specializing in banking services for freelancers and independent contractors has successfully raised a new round of investment. This funding will facilitate continued expansion following a remarkable 1,500% growth in user base over the past year.

Lili: Addressing the Unique Financial Needs of the Self-Employed

Lili offers a unified platform enabling freelancers to manage both personal and professional finances within a single account. It also provides resources designed to navigate the specific financial and accounting challenges inherent in operating as a sole proprietorship.

The company recently secured $55 million in a Series B funding round, earmarked for further development and enhancement of its platform. Currently, Lili provides users with a combined account and debit card for all expenditures, alongside an intelligent “assistant” that analyzes spending patterns and estimates future tax liabilities.

Future Expansion Plans

Looking ahead, Lili intends to incorporate features such as invoicing tools, streamlined payment processing, and access to credit products – including loans and cash advances – for its customer base.

“Our focus is on providing financial solutions tailored for freelancers,” explained Lilac Bar David, co-founder and CEO, in a recent interview. “We are defining a new user profile, situated between traditional consumers and businesses, with distinct requirements. Considering the evolving economic landscape and the future of work, these needs must be addressed.”

Market Focus and Growth Potential

Headquartered in New York and Israel, Lili’s primary market is the United States. Bar David believes the U.S. market presents substantial opportunities for sustained growth. Currently, approximately 40% of the workforce is engaged in freelance work, a figure projected to exceed 50% by 2027.

Investment Details

The funding round was led by Group 11, a venture capital firm specializing in fintech investments. Target Global, AltaIR, and existing investors also participated. Previous backers include Zeev Ventures, Foundation Capital, and the Google for Startups accelerator. To date, Lili has raised a total of $80 million, with the current valuation remaining undisclosed.

Rapid Customer Acquisition

Launched in January 2020, just prior to the onset of the COVID-19 pandemic, Lili has already acquired a customer base of 200,000, according to Bar David.

The Impact of the Pandemic

The company’s growth was significantly accelerated by the shifts in the working world triggered by the COVID-19 crisis, both in terms of an influx of potential users and the delivery of its services.

The pandemic led to a surge in the number of individuals entering the freelance economy. Some experienced job losses due to business closures, while others proactively sought alternative income streams rather than pursuing traditional employment during a period of uncertainty.

A Disproportionate Impact on Women

The shift to freelance work particularly impacted women, with over 5 million losing their jobs as a result of the pandemic. Lili reports that approximately 60% of its new users are female.

Adapting to a Changing Landscape

Bar David emphasized the need for a flexible and accessible financial solution, eliminating the requirement for in-person banking visits.

“We were ideally positioned to capitalize on these trends,” she stated. “The pandemic not only impacted the freelance economy but also fostered a greater willingness to adopt digital services like ours, which had a substantial effect.”

The Allure and Challenges of Freelancing

Freelancing offers numerous benefits, including autonomy over work hours, project selection, and execution. It allows individuals to pursue new opportunities without managerial constraints.

However, freelancing also presents significant challenges. Managing time effectively, securing consistent work, and negotiating fair compensation can be demanding. Furthermore, freelancers are responsible for all aspects of business management.

The Burden of Self-Employment Administration

This includes meticulous expense tracking, tax compliance, and budgeting. These tasks can be particularly daunting for those without a strong financial background.

Lili’s Value Proposition

Lili addresses these pain points by providing a comprehensive system for managing the financial complexities of self-employment. It goes beyond simple payment processing to offer insights into spending habits, tax estimations, and expense categorization.

Unlike managing finances through personal accounts or separate business accounts, Lili aims to deliver a streamlined and user-friendly experience.

Future Integrations and Expansion

The company plans to integrate with additional third-party applications commonly used by freelancers for invoicing and payment processing. Existing integrations include Venmo and QuickBooks. Bar David stated the goal is to provide “whatever a self-employed person needs to be successful.”

Standing Out in a Crowded Market

While the neobank market is becoming increasingly competitive, Lili’s dedicated focus on freelancers differentiates it from broader financial institutions.

“We anticipate continued growth in the freelancer economy beyond the pandemic,” said Dovi Frances, founding partner at Group 11. “Lili is well-positioned to capitalize on this trend by providing essential, effective, and intuitive tools for managing what was previously a complex and inefficient process.”

Although other neobanks also target freelancers, including established players and specialists like Lance Bank, Lili is prioritizing technological innovation to establish itself as the leading solution.