Israeli Gig Economy Startup Fiverr Slates U.S. IPO

Prospectus shows company, which matches freelancers with customers, is growing rapidly but posting losses

Fiverr CEO Micha Kaufman.
Eyal Toueg

Fiverr, the Israeli startup that matches freelancers around the world with customers, said Thursday it was planning an initial public offering in the United States and revealed its financial data for the first time.

The prospectus filed with the U.S. Securities and Exchange Commission didn’t provide details about the offering but said – unusually for a high-tech company – that the shares would be listed on the New York Stock Exchange. Sources told Bloomberg News that Fiverr is hoping to be valued at $800 million in the IPO.

J.P. Morgan Securities and Citigroup Global Markets Inc. will be the lead joint book-runners of the offering.

The offering comes at a challenging time for tech companies after high-profile IPOs by ride-sharing companies Uber and Lyft. Nevertheless, Fiverr isn’t the only Israeli company readying to go the IPO route after Gett said earlier this month it had raised $120 million ahead of a planned offering.

A key player in the gig economy, Fiverr serves as a marketplace for freelancers offering services such as copy editing, logo design, voiceovers, social media management and translations for businesses and individuals.

Founded in 2010 by Israelis CEO Micha Kaufman and Shai Wininger and based in Tel Aviv, Fiverr originally required freelancers to charge a fixed fee of $5 for their work. They changed the policy four years later to allow freelancers to charge what they want.

“The revolution that e-commerce brought into the world since the early 1990s is only now beginning to take place in the workplace, and it is starting with freelancers. Freelancers are challenging traditional 9-to-5 jobs. They want to pursue their dreams and careers with more freedom,” Kaufman said in the prospectus.

Since it was founded, Fiverr says it has facilitated more than 50 million transactions in more than 160 countries between a total 5.5 million buyers and 830,000 freelancers. At the end of the first quarter of this year, it said 255,000 freelancers and more than 2.1 million customers were active on its site, meaning that they had conducted at least one transaction over the last 12 months.

The figures released by Fiverr show it has been growing rapidly, but that it is losing money. While revenue increased by nearly 45% from $52.1 million in 2017 to $75.5 million last year, net losses widened nearly 90% from $19.3 million in 2017 to $36.1 million in 2018.

In the first quarter of 2019, however, Fiverr posted an $8 million loss, half the figure of a year earlier.

Fiverr charges a fee for its service to freelancers, with the average buyer spending $150 as of March 31, up from $126 in the year-earlier quarter.

Fiverr has raised about $170 million, including about $57 million in two rounds since last November, since it was formed. Investors include Israeli venture fund Qumra Capital and the American VCs Bessemer Venture Partners, Square Peg Capital and Access Venture Capital and Cubit Investments.

Wininger left Fiverr to set up the online insurance company Lemonade.

Fiverr said it believed that based on U.S. census data that the “market opportunity” for the company in America alone is about $100 billion. It said repeat buyers had risen from 55% of the total in 2017 to 57% last year, showing that its model was succeeding with users.

However, the prospectus also noted risks for the company going forward, among them the risk that big social media platforms would enter the segment and/ or that freelancers would use Fiverr to build their businesses and then do transactions independently to save themselves Fiverr’s fees.