Fiverr – Investing in the King of Platform for Freelancers

Contributed by: The Big Fat Whale

It has been a treasure-hunting time for battered growth stocks. After our previous article on Teladoc, this time round we would like to touch on Fiverr. We are trying to shortlist companies that have a proof of concept, a runway for sustainable growth and a sound business model.

Fiverr is a platform that connects freelancers with business owners looking for services in various digital projects, including website design, content writing, and voice-overs. In recent times, even artificial intelligence and data analytics is added to their portfolio of services. Their main competitor would be Upwork and Freelancer.com.

 

Growth of the Freelance Market

According to a report by Growth Market Reports, the online market was valued at USD 5.1 billion in 2022 and is expected to reach USD 18.3 billion, expanding at a CAGR of 15.1% by the end of 2031.

The market growth is attributed to the rising adoption of freelance platforms by established companies around the world increasing the talent pool for businesses and providing secured jobs and payments to freelancers.

Source: Fiverr Investor Deck

There is a huge addressable market for freelance services of 247 billion US dollars just in the US and we have not touched the other parts of the world yet which Fiverr have a foothold on. To put things in perspective, Fiverr's revenue for 2022 is just 337 million US dollars.

 

What is Going Well?

With the world moving more into an open work concept where freelancers and remote working could be part of the human resource set-up. Adding on, the migration of traditional freelancing activity to the online world is just in its infancy with a good growth runway.  The prospect of Fiverr's business model as a platform marketplace for freelancers and employers looks sustainable and viable.

Source: Fiverr Investor Deck

Also, Fiverr has one of the most recognisable brands in the freelance marketplace. Their bigger competitors are Upwork and Freelancer.com. Their growth metrics such as active buyers and spend per buyer have also been on a good upward trajectory. The average spend is 262 dollars which is lower than their main competitors as Fiverr clients are usually acquiring a one-off service rather than on a long-term project basis.

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