As brick-and-mortar business re-open amid vaccine rollouts, restaurants and retailers in the U.S. have struggled to find workers to fill the void left by the stay-at-home economy.
It’s a strange development for industries that were just a year ago having trouble finding customers and praying to remain open: From hotels to airlines, restaurants to theme parks, the issue now is unmanageable, with rampant demand from consumers eager to get out. In May, U.S. job openings hit a new record of 9.2 million vacancies, according to the Labor Department.
It is in this environment that Instawork, a startup that matches gig-economy workers to jobs, is raising $60 million in Series C funding at $560 million valuation. Craft Ventures led the round in the 140-strong company, and was joined by investors including Greylock, Corner Ventures, Four River Group, WndrCo, Tilman Fertitta (owner of Landry’s and the Houston Rockets), as well as existing investors Benchmark, Spark Capital, GV, Burst Capital, and SV Angel.
The new funding at a more than half-a-billion-dollar valuation represents a huge turnaround for the company that was dealing with furloughs and took a cut to its valuation roughly a year earlier.
Founded in 2015, Instawork had its start focusing on the hospitality industry—connecting chefs, event servers, dishwashers, and bartenders with hourly jobs— but it has since broadened out its focus to encompass other parts of the gig-economy. While the company did not disclose its revenue figure, the company has certainly experienced a post-pandemic booster shot. CEO and co-founder Sumir Meghani says the company’s gross merchandising value grew about six times year-to-date in 2021 compared to 2019, the period before the pandemic. Shifts posted on its platform also grew nine times in the same period.
The early days of the pandemic were not easy for Instawork, which takes a cut on each job posting. Even though it had begun expanding the industries it serviced, its heavy exposure to the hospitality space was visible on its site.
“The world was in chaos,” says Meghani. “We didn’t know what to expect.” The company furloughed about 30% of its headcount in March 2020, and was forced to take a bridge round of funding that valued the business at $75 million, below its previous valuation of $84 million.
Still, even as demand for employees in the hospitality space waned, Instawork itself was able to bounce back as companies began aggressively hiring for warehousing, delivery, and logistics positions. Instawork also updated its platform, adding a way for workers to clock-in, sans contact, with their phones and adding a button that let companies search for specific roles, like warehouse workers.
Instawork’s early growth in that part of the business was then supplemented by its more traditional hospitality lines from states that had looser restrictions on social distancing through those months, such as Florida, Georgia, Arizona, or Texas.
“We are seeing fastest growth in geographies that are first to open up,” says Meghani. “And now we are seeing it everywhere.”
Meghani declined to give a breakdown of what percent of its revenue now comes from the hospitality industry, and what percent now comes from the newer verticals on its site.
Just like investors that poured their money into work-at-home beneficiaries at the start of the pandemic, many are now turning around and jumping into the re-opening play. And Instawork’s investors seem to be betting on that to lift the company’s sails.
“As vaccine distribution expands dramatically across the U.S., we are in the midst of the most rapid economic recovery in U.S. history,” said Craft Ventures General Partner Jeff Fluhr, who is joining the board of directors, in a statement. “Every day we hear more news about businesses that can’t hire workers to meet the sharp rise in demand.”
Instawork plans to expand and hit a headcount of about 320 by 2022. As it is not a subscription business and takes a cut off each job posting, the company is more susceptible to economic volatility, raising the question of whether demand will persist when some of the post-pandemic-related boosts disappear. Meghani for his part is betting on the continued rise of the gig economy rather than full-time work forces.
“A lot of our businesses need to scale up and down,” he said. “I think a lot of this behavior change is permanent.”
