Worksome Secures $13M to Expand Freelancer Platform

Worksome Secures $13 Million Series A Funding to Revolutionize Freelance Talent Management

Significant investment is flowing into the rapidly expanding sector of work transformation: Worksome has announced the successful completion of a $13 million Series A funding round for its freelance talent platform. This follows a tenfold increase in revenue since January 2020, coinciding with the surge in remote work triggered by the COVID-19 pandemic.

Platform Connects Freelancers with Employers

Founded in 2017, the startup boasts a leadership team including former Google employees. Worksome has developed a platform designed to connect freelance professionals seeking project-based work with companies requiring tools for sourcing and managing external talent.

Disrupting Traditional Managed Service Providers

The company is gaining traction with large enterprises that have historically relied on Managed Service Providers (MSPs) for managing and compensating external workforces. Worksome positions itself as a disruptor to established employment agency giants such as Randstad, Adecco, and Manpower.

“Multinational enterprises commonly utilize legacy MSPs to manage flexible workers,” explains CEO and co-founder Morten Petersen. “These businesses often employ manual processes and outdated technology when handling the complexities of hiring and managing freelance workforces. Worksome directly addresses these challenges with a more efficient, streamlined, and user-friendly solution for managing large groups of freelancers and contractors.”

Focus on Integrated Team Members, Not Just Project Outsourcing

Worksome concentrates on assisting medium to large-sized companies – those engaging at least 20 freelancers concurrently – in filling positions within existing teams. This differs from the typical freelancer platform model focused on project outsourcing, as highlighted by Petersen.

“Worksome facilitates the integration of individuals who will contribute essential skills and become integral to long-term business operations,” he states. “The platform establishes connections between companies and skilled freelancers, fostering trust, building lasting relationships, and encouraging repeat engagements.”

Streamlining Complex Hiring Processes

Managing dozens or even hundreds of freelancers simultaneously can introduce significant complexities. Worksome addresses these challenges by assuming greater responsibility for compliance and payments, simplifying the hiring process for large organizations.

Commitment to Fair Treatment of Freelancers

The startup also prioritizes the well-being of its freelance talent pool, aiming to create “a world of meaningful work.” This includes ensuring freelancers receive fair and competitive compensation, as well as timely payments, by handling payroll administration.

Nordic Roots and Investment

Originating in Copenhagen, Worksome’s Series A funding reflects a strong Nordic presence, with investment from Danish business angel and investor Tommy Ahlers, known from the Dragons’ Den TV program, and family home manufacturer Lind & Risør.

Prior to this round, the company had raised nearly $6 million, according to Crunchbase, and also counts unnamed Google executives among its early investors.

A Competitive Landscape

Freelancer platforms and marketplaces are not new, and the space is becoming increasingly crowded with companies attracting venture capital investment in the ‘future of work’. Worksome is therefore operating within a competitive environment.

Notable competitors include Lystable (now Kalo), Malt, Fiverr, HackerRank (for tech roles), and Jobandtalent (for blue-collar work). A growing number of startups are also specializing in supporting freelancer teams, such as Collective, indicating a trend towards increased specialization.

Worksome’s Differentiators

Worksome distinguishes itself from both legacy players and newer startups by combining services like tax compliance, background checks, and payroll management with an AI-powered platform for matching talent to projects.

While other platforms offer back-office administration and AI-driven matching, Worksome claims to address the “entire value chain,” encompassing everything from talent acquisition to onboarding and payment.

Current Scale and Talent Pool

Worksome currently serves 550 active clients and has onboarded 30,000 freelancers to its marketplace. The platform’s talent pool collectively offers over 39,000 unique skills across 12 categories.

Key Skill Categories and Markets

The most in-demand freelancer skills on the platform are in Software and IT, Design and Creative Work, Finance and Management Consulting, alongside a diverse range of specialized skills in engineering and pharmaceuticals.

The company’s largest customer base is located in the creative industries, tech, IT, pharma, and consumer goods sectors, with the U.K. and U.S. representing its biggest markets.

“We are currently facilitating over 20,000 yearly placements,” reports Petersen, adding, “The average annual spend per client is $300,000.”

Future Plans and Investment Allocation

The Series A funding will be allocated to accelerating growth through increased marketing efforts, product development, and global team expansion, with existing offices in London and New York.

Over the past year, Worksome has doubled its team size to 50 and aims to repeat this growth within the next 12 months to support its expanding enterprise client base in the U.S., U.K., and Eurozone.

Addressing Friction in Freelance Work

“Many freelancer platforms overlook the fact that hiring is just the beginning when it comes to reducing friction in working with freelancers,” argues Petersen. “Currently, 75% of the time spent on freelancers is dedicated to administrative tasks such as timesheet approvals, invoicing, and compliance checks, leaving limited time for actual talent acquisition.”

Worksome attracts employers with a “one-click-hire” offer, highlighting its ability to quickly identify and onboard freelancers.

Robust Vetting Process

To mitigate the risks associated with rapid hiring, Worksome implements a rigorous vetting process, including background checks and utilizing proprietary technology to assess freelancers’ skills and suitability.

“We employ a two-step vetting process to ensure only the highest quality freelance talent joins the Worksome platform,” explains Petersen. “First, an in-house AI robot analyzes applicants’ skillsets, social media profiles, profile completeness, rates, CVs, and work history. Then, our talent specialists manually review candidates scoring 85% or higher.”

Selective Acceptance Rate

A significant majority of freelancer applicants are rejected, as evidenced by the company’s acceptance rate of 30,000 approved freelancers out of 80,000 applicants.

This raises questions about the criteria used to determine who is considered an “appropriate fit” for the platform.

AI-Powered Matching and Quality Control

Worksome’s candidate assessment “robot” evaluates whether freelancers can demonstrate the necessary skillset, work history, industry experience, and profile depth to meet its quality standards. For example, it would not approve a freelancer claiming expertise in complex IT infrastructure projects without supporting evidence.

On the AI-powered freelancer-to-project matching front, Worksome states its technology aims to connect freelancers “who have the highest likelihood of completing a job with high satisfaction, based on their work history, performance, and skills used on previous jobs.”

The company emphasizes that its AI serves as a support tool for human decision-making, rather than making independent hiring decisions. This is a relevant consideration given EU data protection regulations, which grant individuals the right to object to automated decision-making in significant cases.

Regulatory Scrutiny and Algorithmic Bias

The use of automation technologies, such as AI, in employment assessments carries the risk of perpetuating scaled discrimination. Therefore, such applications are likely to face increased regulatory scrutiny in the European Union under upcoming rules governing ‘high-risk’ AI systems, including those used for job matching.

Worksome’s Stance on AI and Bias

Despite these concerns, Worksome remains optimistic about the potential of AI in employment. “We utilize advanced matching algorithms to effectively shortlist candidates based solely on objective criteria, minimizing human bias,” claims Petersen. “Our algorithms do not consider gender, ethnicity, educational institutions, or other factors typically associated with bias.”

“AI has the potential to address industry challenges such as recruitment bias, limited worker mobility, and lack of access to digital skills for small and medium-sized businesses. We believe technology should be used to eliminate bias from the hiring process,” he adds. “Our technology was built with this purpose in mind, and the proposed legislation could validate our efforts.”

Petersen acknowledges the potential downside of regulations limiting innovation, particularly for startups, but emphasizes the importance of balancing innovation with responsible AI practices.

The Impact of the Pandemic and Future Trends

Worksome confirms that the majority of projects facilitated last year were conducted remotely, reflecting the pandemic-driven shift to remote work.

“We are currently observing a gradual return to a combination of remote and onsite work, and expect this hybrid model to become the norm for most of our clients,” Petersen states. “During times of economic uncertainty, companies tend to increase their reliance on freelancers. However, this trend is overshadowed by a broader shift towards flexible work, accelerated by COVID-19 but underway for years.”

“While remote work has unlocked access to talent globally, 70% of executives anticipate using more temporary workers and contractors onsite than before the pandemic, according to a recent McKinsey study. This demonstrates the value businesses place on the flexibility of an on-demand workforce of skilled specialists who can interact directly with their teams.”

Sustained Growth in the Freelance Economy

Asked whether the growth in freelancing will continue beyond the pandemic, Petersen suggests that the underlying trend is towards businesses needing increased flexibility, regardless of the specific mix of full-time and freelance staff. This positions platforms like Worksome for continued growth.

“Business leaders overwhelmingly believe that shifting their talent model to a blend of full-time employees and freelancers can provide a competitive advantage (Source: BCG),” he says. “We see two key drivers of this sentiment: access to talent and building an agile and flexible organization. The pandemic has amplified this trend, allowing organizations to navigate challenges and capitalize on opportunities.”

“With the rapid pace of change and the constant need for businesses to reinvent themselves, access to highly skilled and flexible talent is essential – now, in the next five years, and beyond.”