Another tech IPO is coming around the corner in what has been a strong year for startups taking the plunge and going public. Upwork — a marketplace connecting 375,000 freelance developers, writers, marketers and others with close to half a million clients — announced a plan to list on the Nasdaq exchange to trade under the ticker UPWK, filing an S-1 form with the SEC with initial financials and other details about the company.
Upwork’s IPO is yet another mark of the bigger swing we’ve seen of privately-backed tech companies turning to the public markets for their next cash infusions for growth, this week alone seeing listings for Elastic and another freelancer behemoth, Meituan in China.
The double-whammy of not one but two freelancer marketplaces (Meituan is more focused on services and tradespeople) underscores also the continuing growth of contractors as a key part of the labor force. There have been reports that Fiverr, another freelancer platform, will also IPO by next year with a $1 billion valuation (news perhaps timed to leak to offset Upwork’s S-1).
But while freelance work provides a lot of flexibility to businesses in terms of how they scale up and down their workforces, and to people in terms of how they make money without being tied to a single job, it does not come without its own set of controversies. Not being tied to more traditional employment contracts gives those workers fewer employment rights and benefits, and it’s been found that the fierce competition among marketplaces and workers has led to lower wages overall. In that bigger race for more efficiency, Upwork itself has been in the spotlight for what appears to be invasive practices to make sure that their clients are getting their money’s worth from workers, which hasn’t helped the company’s image.
So far, Upwork has not disclosed how much it intends to raise in the IPO, but its S-1 provides some details about the financials and other metrics of the company:
— In the 12 months that ended in June 2018, Upwork made $228 million in revenues on Gross Services Value (GSV: the total amount of overall service work ‘purchased’ on its platform) of $1.56 billion. Sales are currently growing at around 20 percent.
— The company, however, operates at a net loss, most recently posting $7.1 million for the six months ending June 2018.
— Upwork calls itself the largest global skilled freelancer marketplace. In the year that ended in June 2018, some 2 million projects were created on its platform engaging finance specialists, developers and designers, marketing specialists and writers of different kinds. It said it currently has some 375,000 freelancers and 475,000 clients registered on its platform.
— Upwork said a whole 10 percent of its business comes from a single, unnamed client in the six months that ended June 2018. (It had two clients each accounting for 10 percent of its revenues in 2016 and 2017.)
— The company operates in 180 countries.
The news comes after reports in July of this year that Upwork — rebranded in 2015 after the merger of Elance and oDesk — had made a confidential filing to initiate the process. Confidential filings is a route that many startups take in the first instance to start to sound out investors and begin the process of listing without as much public scrutiny.
The company most recently disclosed a valuation way back in 2014, when it was valued at around $700 million. The cap table is not completely clear given its merged status. According to Pitchbook, Upwork itself has only raised around $30 million. Investors in the company include DAG Ventures, Benchmark Capital , T. Rowe Price, FirstMark Capital, Jackson Square Ventures, Globespan Capital Partners and Stripes Group.
Upwork said that part of the IPO proceeds will be used to pay back $19 million of a loan made by Silicon Valley Bank.