Silicon Valley’s Next Target: The One-Person Business

With more Americans running one-person businesses than ever before, Silicon Valley is paying attention. The latest sign is the launch of Collective, a provider of back-office services for freelancers. 

Collective, which launched yesterday, offers an online management dashboard providing one-stop access to banking information and third-party software like Gusto and QuickBooks; assistance with S Corp. formation, accounting, bookkeeping and tax services; and access to advisors and its entrepreneurial community.

Members pay monthly for the services, with fees starting at $199 per month. Many freelancers already use these types of services, but they generally purchase them from separate providers. 

Hooman Radfar, CEO and co-founder, says Collective is a response to the “Passion Economy,” where many people are rethinking how they earn a living and gravitating toward independent work that gives them freedom, independence and work/life balance. It’s a trend, championed by early pioneers like Tim Ferriss, that’s been accelerated by the remote lifestyles the COVID-19 pandemic ushered in and that is increasingly popular among Generation Z. 

In 2018 there were 28.5 million nonemployer firms—those with no payroll—in the U.S., according to the U.S. Census Bureau. They were generally made up of solo entrepreneurs but sometimes business partners or teams of co-founders. They made up the majority of the 30.2 million small businesses in the country. 

“We’re seeing a huge shift in the future of work,” says Radfar. “For us, it’s about supporting that movement and finding an easy solution.” 

Radfar previously co-founded and served as CEO of AddThis, which was acquired by Oracle, and is a venture partner at startup studio Expa. He was also an early investor in Uber, Convoy, Onfido, and Sweetgreen.

Collective has raised $8.65 million in a seed round led by General Catalyst and QED. Other investors include Garrett Camp, founder of Expa and Uber; Vitor Lourenco, a partner in Expa; Darian Shirazi, general partner at Google’s Gradient Ventures; Scott Belsky, Adobe’s chief product officer and founder of Behance; Dylan Field, founder of Figma; Gokul Rajaram, executive at DoorDash / Caviar; Jared Hecht, founder and CEO of Fundera; Dan Lewis, founder and CEO of Convoy; and Topher Conway, co-founder of SV Angel, according to Collective. Radfar co-founded Collective with CPO Ugur Kaner and CTO Bugra Akcay. 

Collective, which tested its services with “hundreds” of entrepreneurs, according to Radfar, plans to use the funding to bring its product to market, develop new technologies and products, and build out additional community features.

Radfar expects interest in one-person businesses to accelerate among investors, who have realized it’s possible to reach them efficiently in aggregate using programmatic advertising on social media channels. The rise of self-service sites like the A/B testing platform Optimizely, which makes it easier for microbusinesses to evaluate ideas, has underlined the traction the microbusiness movement is achieving, he has found. “The venture community is saying smaller businesses can make us billions of dollars,” says Radfar. 

Meanwhile, more companies are turning to contractors and freelancers to stay nimble during the pandemic, helping more freelancers stay in business. “COVID is an accelerator,” he says.   

No doubt as Silicon Valley finds there is money to be made supporting one-person businesses, there will be more competition for their attention. It’s a trend that many of those familiar with the world of one-person businesses would consider long overdue.