The freelance employment market now comprises 34 percent of the United States workforce, according to a recent report, with freelance workers contributing approximately $1.4 trillion to the nation's economy. Intrinsically connected with today's freelance market, digital services has a compound annual growth rate of 6 percent and may be poised to become one of the next global economic drivers. Blockchain is a revolutionary technology that has the potential to fuel the growth of the digital freelance services market by enabling secure, transparent and rapid transactions. Companies bringing "Blockchain" to new industries include Bitcoin Investment Trust, MGT Capital Investments, Inc., HIVE Blockchain Technologies Ltd., Global Blockchain Technologies Corp. and Victory Square Technologies, Inc.
Forbes reported that the next great area of blockchain disruption in 2018 could be the online freelancing business. Blockchain startups that spot this potentially profitable market gap are already popping up on the digital map. Capaciti, the professional services marketplace of parent company Howyl Ventures - which was recently acquired in part by Victory Square Technologies- is poised to potentially be a big disruptor in the digital freelance space.
Targeting launch in Q3 of this year, Capaciti will be the world's first blockchain-based, enterprise-grade marketplace for digital design and technology development services. With platform transactions projected to reach $36.9 million in 2019 and to surge to over $495 million by 2022, Capaciti looks like it is setting the stage for a billion-dollar show.
Capaciti's application of blockchain technology upgrades an online marketplace from a manual, analog process to a decentralized, automated marketplace. This innovation could create the foundation for the next evolution of connecting talent and clients in the digital marketplace.
The market for Victory Square Technologies' Capaciti's initial service offering is substantial. In the United States alone, the software development market is estimated at over $235 billion per year, with 70 percent of that spend flowing to outsourced partners or freelance professionals.
The world's workforce has become decentralized, and digital services business connections are now mostly made in online marketplaces. Freelancing is predicted to become the workforce majority within a decade. Upwork, arguably the world's largest and most successful online marketplace for freelance services, generates $1.5 billion per year in revenues and is targeting $10 billion in annual revenue by 2022. 99Designs reports a design upload occurs every second, and designers have made over $200 million on the site from over 444,000 clients.
Capaciti's incubator, Victory Square Technologies, has a management team of established leaders in blockchain technology and digital marketplaces. The company was named one of the top 14 blockchain companies to watch in 2018 by Entrepreneur.com. CEO Shafin Diamond Tejani was named Canadian Angel Investor of the Year in 2017. Tejani has also launched more than 40 startups and has generated over $100 million in revenues per year.
Capaciti co-founders Marc Low, Steve Davis and Gary Bode have a successful track record of delivering projects using a distributed workforce model for big brands such as HCL Technology, Barclays Bank, Sotheby's, Pacific Union International and Estee Lauder. They have collectively launched the global talent crowdsourcing platform Deloitte Pixel, held a senior marketing role at Apple and grown the team at Chimp Technology from five people to more than 70.
Victory Square Technologies' Capaciti could potentially disrupt this trillion-dollar market that is in serious need of a technology upgrade.
Major Money Markets Ripe for Disruption
Capaciti's freelance software development platform alone breaks into a $237 billion market. With plans to expand into additional service verticals, Victory Square Technologies new acquisition may have spotted a massive untapped reservoir of enterprise-grade business. Marketplaces such as Upwork, 99designs and Fiverr service some of the need but remain challenged in areas that can create a price squeeze in a hypercompetitive environment. Price squeezes can drive down profit margins to unsustainable levels for vendors.
Small-business clients often mine these sites to find workers for the lowest possible rate.
Business relationships in online project marketplaces can start off well but end badly, with losses being cut on both sides. Workers pressure clients into payment for incomplete or insufficient work or want to move off the contracting platform to communicate and transact.
These markets, then, are arguably ripe for disruption.
Decluttering and De-risking the Online Marketplace
Victory Square Technologies' Capaciti's model pairs top-tier enterprise clients with top-tier talent to effectively deliver projects, creating an exchange that removes many risk elements.
Capaciti's business model moderates business relationships in the online marketplace. Rather than just creating a job board on which to post and pitch, participants on the platform vet the profiles and reputations of both freelancers and clients. Capaciti solves the mystery of who the clients and vendors are and what they do best. The company has designed a system for executing enterprise-level projects in a way that avoids the pitfalls of overpricing and delivery disagreements.
A blockchain-based reputation management protocol empowers vendors to earn a transparent and auditable "reputation score." Blockchain smart contracts are used to manage contractual obligations between client and vendor and increase the speed and efficiency with which freelancers get paid for work performed, as payment settlements are transferred instantly upon successful completion.
With blockchain technology, a global reach and a laser focus on user retention, Victory Square Technologies' Capaciti could potentially upstage companies such as Upwork, 99designs and Fiverr.
A Tech Vertical Fueled for Hypergrowth
The Capaciti platform is already being used internally by Victory Square Technologies to service existing client work and, once launched publicly, could be well-positioned to scale rapidly. First launching in the North American market, Capaciti will begin expansion into key markets in Europe and Asia next year. Victory Square Technologies' investment in Capaciti sets the stage for success for this technology-driven vertical, already poised for growth and slated to launch soon with transactions projected in the millions straight out of the gate.
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