The freelance economy is booming in the wake of the pandemic. While more than 14 million Americans are unemployed, many people are choosing to start their own businesses rather than look for something new. Upwork reports that more than a third of the country’s workforce has been carrying out some form of freelance work over the past 12 months.
Those joining the freelance workforce for the first time might have a lot of questions, especially pertaining to accounting and tax compliance. San Francisco-based startup Collective handles all of those messy financial details and more, so that freelancers can get back to focusing on the work that matters.
“The one thing that I’ve learned is that finances are hard. It doesn’t matter who you are,” Hooman Radfar, co-founder and CEO of Collective, said in an interview with Built In.
Collective’s back office platform provides self-employed people with an array of financial services. According to the company, the platform covers just about everything related to running your own business. Services offered include quarterly reviews of accounts and books, tax preparation and filing, invoice preparation assistance and more.
The company launched out of stealth on Tuesday with $8.65 million in funding to empower and support those that are self-employed. The seed round was co-led by General Catalyst and QED Investors.
“Despite the fact that they represent a third of the workforce, businesses-of-one are deeply underserved and desperately need the right community and tools to run their companies,” Radfar said in a statement.
The Birth of Collective
Several years ago, when Radfar met his co-founder and eventual CPO, Ugur Kaner, he had just moved to the United States from Turkey. Kaner, a serial entrepreneur, began freelancing when he first arrived, but had difficulties understanding the financial ins-and-outs of the U.S. tax system.
“The United States tax system relative to some other tax systems around the world ... it’s really hard and complicated to understand and Ugur ended up really having issues with his taxes,” Radfar said.
When the two met to discuss and resolve said issues, along with CTO Bugra Akcay, they bonded over their shared love for entrepreneurship and the idea for Collective was born.
“We just want to make it so that people can focus on their passion and not their paperwork. So that they can experience that freedom and independence of being their own business, but they can still have the advantage of a community. They don’t have to feel alone, they can feel supported,” Radfar continued.
The term “freelancer” doesn’t sit right with Radfar, which is why he instead opts for the term “business-of-one.”
“A lot of our members are creatives and builders. They do this full time. So, there’s nothing wrong with that term, freelancing, of course, but a lot of them don’t self identify as that. They’re like ... I’m a consultant. I’m a growth hacker. I’m a performance marketer. They really look at this as their full-time business,” Radfar said.
Across the Pond
Radfar’s lived experience as an immigrant to this country deeply informed his motivation to start Collective. His parents fled Iran during the revolution of 1979, and he was born in London and moved to the U.S. several years ago. It was a transition that wasn’t always easy.
“A lot of this is very personal, not just because [my co-founders and I] have all been entrepreneurs, but we’ve all been immigrants and entrepreneurs in a country that’s already hard enough to run a business as is,” Radfar continued.
But Radfar has found success. He previously founded social bookmarking service AddThis and eventually helped lead the company to its acquisition by Oracle. He was also an early investor in Uber, Convoy, Onfido and Sweetgreen.
“If we can take these [financial] problems away and make things easier ... you know that’s one less stumbling block for those folks [that have recently immigrated to the U.S.],” Radfar said.
Looking Ahead
Radfar is hopeful about what the future holds for Collective and its prospective users.
“We’re excited. When we discovered that this could be done, and that we could help people, you know, kind of deliver this peace of mind that pays. We were hooked and ready to go,” Radfar said.
The new capital will be used to scale the platform in order to meet customer demand. The company is now hiring for several open positions. Collective is looking to add a product manager, software engineer and software developer to its team.
