The announcement that Elance has just attracted an additional $16m in funding is another confirmation of investor confidence in the service marketplace model and crowdsourcing in general. Elance is one of the companies we profile and compare in our Service Marketplace Overview, Chapter 13, of Getting Results from Crowds.
The funding is not surprising given the very healthy growth service marketplaces are currently experiencing despite the global economic slowdown. Last year Elance grew by 120% based on the number of clients and providers working on the site and CEO Fabio Rosati has confirmed that the new funding will help to “expand our client and contractor networks around the world.”
Meanwhile rival marketplace oDesk experienced similar rapid growth, with contractors earning more than $225m in 2011, whist in 2010 the comparable figure was $115m.
This is Elance’s first injection of external capital since the early noughties, but recently they have been making increasingly confident moves, for example pledging $1m in service fee credits to the StartUp America Partnership to encourage small business growth, and the integration of news apps including video conferencing facilities into the platform.
It will be interesting to observe if other service marketplaces will follow suit and also attract investment. For example vWorker has never received any outside funding and Guru hasn’t received anything since 2000. Ultimately they may need further capital to remain competitive with the likes of Elance and oDesk who continue to advance and invest in their technology platforms. Meanwhile Freelancer.com was acquired in 2009 but hasn’t received additional capital since.
The new investment in Elance adds to the growing list of other recent funding announcements from other companies using crowdsourcing business models. These include $17m for uTest, Kaggle receiving $11m and DesignCrowd attracting $3m in investment. Meanwhile Philip Rosedale’s start-up Coffee & Power received $1m in December.
Of course all this is confirmation that crowd-driven businesses are here to stay and will continue to flourish in 2012. Which start-ups or established companies do you think will be the next to attract investment? Who do you think will be the “star-performer” of 2012?
