Blue-collar gig platform Instawork has closed a $60 million funding round, hoping that the recent labor shortage across the hospitality and logistics industries will accelerate the firm’s surging growth.
The investment brings Instawork’s funding to $100 million and its value to about $500 million, the firm announced.
Craft Ventures led the round. Other participants were Greylock, Corner Ventures, Four River Group, WndrCo, and Tilman Fertitta, owner of Landry’s and the Houston Rockets. Existing investors Benchmark, Spark Capital, GV, Burst Capital, and SV Angel also took part.
Instawork matches freelance workers with firms with shifts to fill — often one-off gigs requiring hundreds of temporary workers. The company claims 1 million freelancers users, but doesn’t disclose how many employers it serves. The funding announcement states it works with “thousands” of enterprise clients, including big-name companies such as Marriott, Nordstrom, Whole Foods, and Staples. Instawork operates in 25 U.S. metro markets, including the biggest cities in the country, according to its website.
The company will use the funding to expand into new markets, job categories, and industries, while also investing in more training and development initiatives to help worker clients advance their careers. The firm plans to double its headcount to about 300 staff by year’s end, the company stated.
The firm monetizes by taking a cut of the gross pay on each shift “effectively a take rate on the GMV, but closer to the Airbnb model,” company founder and CEO Sumir Meghani explained to the AIM Group. On some shifts, the company also charges a booking fee, he wrote.
In contrast to rivals such as Snag, Wonolo or Pared, Instawork does not directly employ its shift workers. It offers flexible terms in which workers can either invoice as independent contractors or work as typical, salaried employees. In the latter case, the workers are employed by a third-party staffing agency that partners with Instawork. In either case, Instawork serves as the platform on which the parties find one another and transact.
Founded in 2015, Instawork first focused on the hospitality industry. Although it reportedly grew revenues at 300% per annum prior to the pandemic, Instawork hit the skids during the early lockdowns, laying off 30% of its internal staff, according to Fortune.
As consumers turned to ecommerce in 2020, Instawork expanded into the warehouse and logistics industries, and added features to its platform, including a button that lets employers look for workers in specific roles.
As the pandemic wore on, the company replenished its stable of hospitality workers in markets with looser distancing rules, e.g. Florida, Georgia, Arizona and Texas.
Now, as the country sheds the last of its pandemic restrictions, the firm says thousands of new workers are signing up each day. It says its number of posted shifts have grown 8x in two years.
“Instawork is now seeing tailwinds layered on top of tailwinds,” according to a blog post by Jeff Fluhr, a general partner at Craft Ventures who will join Instawork’s board of directors.
The investor believes the pandemic has permanently changed the labor market in Instawork’s favor.
During the pandemic, employers with full-time staff had to either lay off workers or take federal loans to keep them on board, a huge challenge.
“Many of these businesses are now eyes wide open to the big advantages of flexible staff: lower fixed costs, ability to flex up during seasonal peaks, and ease of reducing capacity when there are unforeseen changes (eg, global pandemics),” Fluhr wrote. “This is one of the many lessons COVID has taught us and one we believe will impact staffing far into the future.”