Israeli Startup Fiverr Eyeing IPO at $1 Billion Valuation

Fiverr, an online freelance platform, is meeting with underwriters with target date of early 2019

Micha Kaufman, CEO and founder of Fiverr.
Eyal Toueg

Fiverr, the Israeli startup that provides an online marketplace for freelance services, is gearing up for an initial public offering in the United States that will value the company at $1 billion, TheMarker has learned.

The company, founded in 2010 by Shai Wininger and Micha Kaufman, has begun meeting with potential Wall Street underwriters with a target date for completing the offering at the start of next year, sources said. The company declined to comment.

The Fiverr platform matches freelancers with potential customers around the world, mainly small and medium-sized companies, making it a player in the merging “gig economy.” Typical services include graphic art, video editing, software development, copyrighting and other professions that can be performed online.

>> Read more: Brains Behind 'Micro Jobs' Sensation Fiverr Have Amazon, eBay in Their Sights

When it began, services were offered at a single price of $5, hence the company’s name, but today users can set their own prices. Those can range as high as $10,000, but more typically prices are set very low.

Fiverr collects a 20% commission on jobs won via the site.

Fiverr has competitors like Upwork and Freelancer.com, but it has become an international brand in its segment and is rated among the most popular websites in the United States. 

“Since we started Fiverr, we’ve succeeded in solving the big problem of freelancers – finding customers and generating income,” Kaufman, who is now CEO, told TheMarker in an interview last year. “I have no doubt that we will be a company worth $1 billion.” 

If the Fiverr IPO goes through, it will be a shot in the arm for the Israeli tech scene, which has suffered a paucity of public offerings. Figures from the Israel Venture Capital-Meitar Exits Report showed only three IPOs in the first half of this year, down from eight the same time in 2017. The three were all small, worth a combined $114 million, according to IVC figures.

The timing, however, could be good for the company, with the tech-heavy Nasdaq index up 15% this year alone and at a record high. The IPO market in the U.S. has been strong this year, with 1,515 companies starting trading on the Nasdaq, a 69% increase over a year earlier.

Fiverr says about one million freelancers use its platform that posts 7,500 new job offers every day and does a million job matches a month. Most of the freelancers are from developing countries.

“When we began Fiverr people were a little skeptical about the idea of the shared economy or gig economy. I think the skepticism has disappeared after companies like Uber and Kickstarter appeared and operate in the same market,” Kaufmann said in 2015, citing figures that 30% of the U.S. labor market consists of freelancers, a figure he said would grow to 40% by 2020.

While Fiverr is often a source of critical income for freelancers in Third World countries, in developed economies many see the platform and others in the gig economy as creating work that provides no steady income or social benefits.  

The company ran into tailwinds last March when it was accused of promoting a distorted work ethic in its “In Doers We Trust” campaign that touted how hard its freelancers work even at the cost of their health or sex lives. The company sought two months later to make amends by offering instructional videos for freelancers under the name Fiverr Elevate on topics like savings, managing cash, taxes and pensions. 

The move followed Fiverr’s acquisition in January of the U.S. startup And Co with a portfolio of online tools to help freelancers manage their businesses.

To date, Fiverr has raised $110 million in capital in five fundraising rounds. Among its earliest investors were the angel investors Guy Gamzu and Adam Fischer. They were subsequently joined by Square Peg Capital, Qumra Capital, Accel Partners, Bessemer Venture Partners and Jonathan Kolber.  The company employs 300 people, two thirds of them in Israel.