Bubty, a Dutch startup founded in 2020 by entrepreneurs Lee Willoughby and Benjamin Schriel, has raised an additional $3.3 million in seed funding to expand its latest offering, Bubty Services.
This solution aims to help companies navigate the complexities of freelancer and independent contractor (IC) classification in over 190 countries. With the global freelancer market comprising nearly half of the workforce and projected to keep growing, the demand for regulatory compliance has intensified, making Bubty’s services increasingly relevant.
Just a while back, we have also reported about Argentine-based Ualá that raised $300M in Series E funding led by Allianz X. It’s a good read too.
What is Bubty and what does it offer
The practice of hiring freelancers and ICs has surged worldwide, with over 1.57 billion freelancers in the global workforce. This trend, however, comes with the risk of worker misclassification—where businesses incorrectly categorise freelancers as employees, leading to potential financial and legal repercussions. In the U.S., companies like FedEx and Uber have faced multimillion-dollar penalties for misclassifying workers, highlighting the need for stricter compliance measures. The regulatory focus is similar in many other countries, further underscoring the value of Bubty’s services.
“Governments worldwide are cracking down on freelancer misclassification, aiming to protect vulnerable freelancers and contractors,” said Lee Willoughby, Bubty’s co-founder. He noted that these regulations place significant responsibility on businesses, which are now at risk of penalties and legal action if they misclassify workers. This, according to Willoughby, has made some companies hesitant to engage with freelancers altogether. With Bubty Services, the company offers a compliance-driven solution that enables businesses to safely engage freelancers without compromising the contractors’ independence.
Bubty’s latest offering, Bubty Services, is designed to evaluate the employment relationship between companies and freelancers to ensure it aligns with local regulations. The solution’s automated screening and routing help companies determine the correct classification for each freelancer. In cases where an IC does not meet local regulatory criteria, Bubty offers an Agent of Record (AOR) service. Acting as a legal intermediary, Bubty assumes responsibility for the compliant engagement of freelancers, indemnifying clients from potential misclassification liabilities while allowing businesses to retain full control over their freelance contracts.
With this setup, Bubty addresses compliance concerns for companies while providing flexibility in managing their freelance workforce. The platform’s features allow companies to streamline the entire freelancer management process, from onboarding and contracting to payment and compliance, all through a centralised system.
What is the startup’s plan?
To scale its reach and offer Bubty Services in over 190 countries, the company raised additional funds from existing investors. These funds will fuel its efforts to expand in high-demand markets like the UK and the U.S., where over one million freelancers are already managed through Bubty’s platform. The company’s strategy of pairing freelance management technology with a focus on compliance positions it to capture a growing market as more businesses rely on freelancers but seek to avoid regulatory pitfalls.
Beyond traditional freelance management, Bubty’s platform aims to enhance brand identity and streamline recruitment processes by providing a more integrated and compliant approach to freelancer engagement. This strategy could set Bubty apart in a crowded market, as more companies look to avoid the legal risks and reputational damage associated with misclassification issues.
What do we think about the startup?
Bubty’s funding and its commitment to compliance solutions reflect the evolving needs of a rapidly growing global freelance economy. By providing a mechanism to classify freelancers correctly and comply with local regulations, Bubty aims to reduce risks for companies, allowing them to engage freelancers confidently.
While the company still faces competition and regulatory challenges in its expansion, Bubty’s focus on compliance-driven freelance management positions it as a valuable solution for businesses. As freelancer use increases globally, Bubty’s approach could become critical for organisations navigating the complex landscape of freelancer classification and regulatory compliance.
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