By Lister Delgado, Managing Partner
I am excited to write about why IDEA Fund Partners decided to invest in Pangea and lead the company’s first equity round of funding. I’ll start by saying that I am glad to finally invest in a team of graduates from Brown University, my alma mater. Pangea’s team is young, smart, and driven, and they understand well their market. I am enthusiastic about our Pangea investment because I think the team is pursuing a clear opportunity in a big and still underserved market. Finally, I think that in a short period of time Pangea has built a great platform which is powerful, attractive, and easy to use.
Pangea provides the platform students use to start freelancing while they are at school. The tool has everything a student freelancer needs to find, manage, and invoice clients. While platforms to connect freelancers to customers exist already, none of them adequately serve the needs of the new freelancer. More and more, these are students in college with an interest in freelance work who may need help invoicing customers or consolidating 1099 forms to minimize the challenge of tax filing.
Students want to work to make money, but they also want to build their resumes so that they are attractive future employees. Many skills acquired in college, like graphic design, computer programming and digital marketing are in high demand by employers. Freelancing is the perfect way for students to both make money and develop their professional skills.
Freelance work is also a great way to democratize access to quality job opportunities, where candidates are judged by the merits of their work rather than by any other biased criteria, like school reputation. It is also a great way for companies to try the “fit” of a candidate to their potential future job before hiring full time.
Pangea is a prototypical “college dorm room” launch story. Co-founders Adam Alpert and John Tambunting met at Brown University. Adam, a charismatic, hardworking, and ambitious young entrepreneur, was frustrated with the challenges of finding opportunities to work and manage a book of business as a freelance videographer while at school. John, the son of immigrant parents who had worked hard to build their American Dream, was able to attend an Ivy League school to study applied math and computer science and was eager to put those skills to work.
The founders completed a number of accelerators, including MassChallenge and YCombinator. Pangea started to recruit its first set of users in late 2018. They began as a free platform to start building critical mass and began monetizing in the second half of 2020. The growth has been fantastic. Usage has increased 10x from 2019 to 2020, and the company is on track to grow another 10x by mid 2022.
The opportunity that Pangea is pursuing is driven by three significant market realities:
- The large number of students that earn money by working while at school.
- The explosive growth of the gig economy, where freelance rather than full time employment is more and more commonplace.
- The incredible surge in remote work, recently accelerated by the COVID-19 pandemic.
In the USA there are around 17 million undergraduate students and 3 million graduate students. About 70 percent of full-time college students work while in school. On average, working students spend about 10 hours per week on work study. Many of the jobs that these students perform today are completely unrelated to what they are studying at school, the skills they may have, or the kinds of jobs that they will be performing after graduation. According to our calculations, this represents nearly a $14B market opportunity.
According to Statistica, there are almost 60 million freelance workers in the US today. So, a little more than 1/3 of the US workforce is made up of freelancers. Many of these freelancers use platforms like Upwork and Fiverr to find freelance opportunities and manage their work. However, these platforms do not fully serve the needs of college students, who are starting their careers. Student freelancers typically require more handholding or education and have not yet built a portfolio of clients.
The Freelance Economy today is $1 trillion dollars in size and growing fast. Investors have noticed. As of the writing of this blog post, Upwork is trading at a 16x multiple of revenue, while Fiverr is doing even better at 40x.
The COVID-19 pandemic forced employers to rethink their workforce needs and they realized that productivity goals could be met or exceeded using a remote and freelance workforce. College recruiting has shifted away from in-person campus recruiting. This shift will likely be permanent for many recruiters. Platforms like Handshake, Upwork, and Pangea have handled this trend fairly seamlessly. There is no question that currently we are experiencing a “war on talent”. Companies will continue to target college students and recent graduates to add to their teams but will do so in new and more efficient ways.
Pangea’s vision is to become the go-to platform for college students interested in finding part time paid work that helps build a professional resume. For IDEA Fund Partners, the investment in Pangea follows our “Future of Work” investment focus. We feel that we are experiencing a period of rapid transformation in the way in which we work and periods like this provide great opportunities for investment. “Freelance” and “Flexible Work” are not only significant trends, they are here to stay.
From a thematic perspective, Pangea is working on “democratizing expertise”, “adding efficiency” to an inefficient market, and “automating” the process of recruitment. These are three out the four current IDEA Fund Partners investment themes. Not bad for one investment.
I am excited to see what the future holds for Pangea. They have an awesome team, a great platform, and are addressing a large and growing market opportunity.
We are off to the races!