Start-up of the Week / Everything You Can Do for $5

Israeli start-up raises $15 million in fresh capital and gains some important partners from the venture capital industry.

Inbal Orpaz
Send in e-mailSend in e-mail
Send in e-mailSend in e-mail
Inbal Orpaz

How much are you willing to pay for birthday greetings in an exotic language? How about for 50 "likes" on Facebook within 24 hours? What’s the value to you for some help planning a backpacking trip in Europe? All these things and countless other useful and variegated services can be had for the price of exactly $5 through Israel start-up Fiverr.

The start-up operates a trading forum for service providers that allow them to offer any services to web surfers starting at $5. Service providers who have a higher rating on the site can sell services at higher prices.

Recently, Fiverr raised $15 million from venture capital funds Ace Partners and Bessemer Venture Partners as well as Israeli angel investors Guy Gamzu and Jonathan Kolber. All told, Fiverr has raised $20 million in three rounds of fundraising since it was founded by Shai Wininger and Micha Kaufman.

The business model at Fiverr, which launched in 2010, is based on commissions. For every basic transaction complete through the website, the company earns a dollar, which covers the transaction and payment clearing costs. The charge is only carried out if a transaction is successful. 

"The grand vision of the company over the long term is to build the next eBay for the world of services," says Kaufman, CEO of Fiverr.

In the meantime, the company is enjoying rapid growth. After the latest round of fundraising, the company expanded to over 50 employees and will soon open an office in New York.

Looking at the long haul

Today you can purchase over 750 different services in roughly 200 different countries between $5 and $150 on the site. According to Fiverr, the company is ranked as one of the 100 most popular websites in the United States and one of the 200 most popular websites in the world based on rankings complied by Alexa, a leading web analytics site.

After receiving investors' confidence and backing, Fiverr intends to continue with expansion plans.

"The company isn't looking for a small exit in the near term," says Kaufman. "Instead, we want to build a big company. We believe that every one of the categories in which we offer services – graphic design, computer programming and technical writing – is a big market. From our perspective, the investment was understood as a chance to build a very important global company."

Partnerships with some of the world's leading venture capital funds, which invested in success stories like Facebook, Dropbox, and Spotify, have opened new doors for the Israeli start-up.

"The fundraising wasn't just intended to inject capital into the company to help it grow or to acquire some other companies,” says Kaufman. “Essentially it was to give us a chance to partner with some very big venture capital funds that can help us make the jump towards going international. They give us access to every market that could exist."

To make a living off of birthday greetings

Fiverr's bustling services market doesn't just fulfill the desires of curious consumers, but has also turned into a real source of income for some of its service providers.

"Fiverr is a workplace for a large number of people," says Kaufman, naming a wide range of fields, from graphic design to business consulting, improving the functionality of websites, social media presence, and even small video production.  At the current rate on Fiverr, about 20 seconds is all you can afford.

Israeli start-up Fiverr offers a variety of services - from digital design to custom birthday cards - starting at only $5.Credit: Bloomberg