A Huntington-based startup has received a $10 million investment from a trio of venture capital firms in New York City and Massachusetts, the first substantial VC funding disclosed for an early-stage Long Island company this year.
The backing for Work Market Inc., which provides an online tool for businesses to manage professional freelance and contract workers, came from Softbank Capital, Spark Capital and Union Square Ventures, executives from Work Market and Softbank Capital told Newsday. The firms will receive equity in the company in return for the investment.
"There was a lot of interest" in the company, said Work Market co-founder Jeff Leventhal, 43. "We were able to get terms we thought were excellent." The deal closed Friday.
Companies use Work Market's platform -- which is cloud-based and accessible through any Internet browser -- to hire, pay and manage freelance and contract workers and oversee workflow. Freelancers and independent contractors and consultants can use Work Market to find work. Currently, Work Market has 250 clients that buy work on the platform, and about 38,000 freelance workers using the system.
This is the second round of VC funding for the company. Leventhal and his team received $6 million from Union Square Ventures and Spark Capital to start the company in 2010.
Aiding new companies
The new funding coincides with efforts by Long Island officials to encourage the growth of new companies. In the past year, business incubators and organizations have sprung up offering mentoring and other aid for aspiring entrepreneurs.
When Leventhal began Work Market in 2010, he said he couldn't build up enough of a team on Long Island, so the company was developed in New York City. The Long Island office opened last August.
Leventhal, a Huntington native, said he hopes to add more Long Island to the mix -- he plans to hire up to 70 employees within the year, and the majority of them will be local. The company currently has 40 employees, 15 of whom are based on the Island.
"I don't think the labor force has changed, I think our company has changed," he said of potential hiring on Long Island. "We've got a successful business and it's very well capitalized, so you're not taking as much of a risk coming here as you are in the beginning."
Work Market charges a monthly fee for frequent business users or takes a percentage of the work payment for one-time users. The independent and freelance workers are able to sign up and use the service for free.
"What I love about the business is that it has ... multiple streams of revenue," said Jordan Levy, a Buffalo-based partner at Softbank Capital who led the fundraising for Work Market. "Not only do you get a subscription -- a long-term revenue stream -- you also have another source from transactions that are generated. Those are huge opportunities and advantages for tech companies."
New work landscape
Work Market is also tapping into the freelance workforce, which has grown "exponentially" in recent years as companies try to cut costs, said Sara Horowitz, founder of the Brooklyn-based Freelancers Union, an advocacy group for independent workers.
"Big companies have so many freelancers now that they need to hire companies like Work Market to manage that whole parallel universe of staff," she said.
Leventhal said he sees the future of Long Island's entrepreneurial success rooted in the communities that form in the Island's more vibrant villages and hamlets. There are "world-class executives huddling in their house" here, but the key is for them to come out and be a part of the entrepreneurial effort, he said. "I am more interested in people who're vested and invested in the community here; I don't see emphasis to be near the city, nor do I see the emphasis to be near train tracks," he said. Some business incubators started in the past year have pointed to their proximity to LIRR train stations as an advantage.
For Leventhal, the choice of where to build up that entrepreneurial community is obvious.
"There is a nice center of talent around Huntington, and they're coming out of their houses and they're starting to meet," he said. "Our office is one of those meeting places, and that's the start of an entrepreneurial community."
AT A GLANCE
COMPANY: Work Market Inc.
FOUNDERS: Jeff Leventhal and Jeff Wald
EMPLOYEES: 40 (15 on Long Island)
OFFICES: Huntington and Manhattan
VENTURE FUNDS RAISED: $16 million