Co-founder and CEO Rob Biederman, who said he aims to transform the future of work, explained that his company can help corporations find skilled labor by making the labor market more efficient.
“Labor markets are inefficient and it’s often very difficult to match talent to opportunity when you weren’t able to forecast that far in advance,” he explained.
Catalant: Inspiring the freelance economy
Catalant — which Biederman and two of his Harvard Business School classmates launched in 2013 — initially built its business to match business school students to mostly small- and medium-size companies for freelance assignments.
Now, the company has expanded its freelance base to experienced professionals, typically between 35 and 45 years old who just left management consulting or investment banking. And they’re working with some of the world’s largest companies, including GE (GE), Pfizer (PFE), and Fidelity.
Catalant currently has over 30,000 freelancers — “experts” vetted by the company — on tap and works with over 100 Fortune 1,000 companies.
Experts, along with companies looking for projects, work together to set the fee for a given project. Catalant helps to facilitate a smooth deal — using its online platform — and takes a percentage of the fee. At certain clients, Catalant collects a software fee for additional features or functionality.
Biederman explained that large companies like GE benefit greatly from on-demand expertise, as it allows them to be more nimble and to react to developments in the market.
Meanwhile, more and more workers are looking for non-traditional jobs.
“On our site, [freelancers] can browse any project and put in a bid to work in it. That leads to a professional life that they find more fulfilling,” Biederman said.
New research has shown that that the number of people working as independent contractors — versus holding traditional jobs — has increased significantly, up to 15.8% of total workers currently versus 10.1% a decade ago. This has been aided by technological advancements but also perhaps has been accelerated by gaps in full employment opportunities.
Biederman explained that the contractors at Hourly Nerd — the service powered by Catalant — appreciate flexibility and tasks that align with their specific interests. But there are some drawbacks to freelance work as well, including lack of health insurance and protection measures like paid medical leave.
Still, a study by Intuit found some people choose freelance or contract work because they’re looking to create and control their own schedules, with greater flexibility and the ability to avoid reporting to someone else. In other words, it’s not just that they can’t find a full-time job.
Skills mismatch runway
This may just be the beginning of on-demand growth, according to Biederman.
“This is the first pitch of the first inning in this new sector,” he said. “Work is still thought about as a job description and maybe a 30-year career with the same company. That is a relatively inflexible way to have talent address opportunity.”
Catalant aims to fit into a trend of learning platforms and educational institutions equipping people with skills that can allow them to take tasks and projects on in a more dynamic way, Biederman said.
“So a lot of the ridiculous fluctuations you see in the business cycle come from how hard it is to adjust full time employment. But when everybody is staffable on a moment’s notice, you can react to needs much more quickly,” he explained.
Private company funding
In July, Catalant closed $22 million in Series C funding, led by General Catalyst Partners with participation from Highland Capital Partners, GE Ventures, Mark Cuban, Greylock Partners and Bob Doris of Accanto Partners. This new funding round brought the company’s total amount raised to more than $33M.
But Biederman said while he feels fortunate to have raised cash, there is wariness in the funding market more broadly.
2013 to 2015 was a frothy time for private capital markets, Biederman said, particularly for the new class of on-demand startups that provide a great consumer experience at negative gross margin.
Those companies, he added, have faced difficulty turning profits, which has prompted him to further emphasize a sustainable economic model that can be monetized well, he explained.
Nicole Sinclair is markets correspondent for Yahoo Finance.