Deals

oDesk and Elance merge, forming one giant freelancer company (updated)

Image Credit: Photo Illustration: Eric Blattberg

Updated at 1:45 PM PT with additional comments and details from the CEOs of oDesk and Elance

Two crowdsourcing Goliaths are joining forces to fight off those pesky Davids.

Elance and oDesk, two of the largest online marketplaces for freelancers, today announced their intention to merge. The deal is expected to close within the next four months, pending regulatory approval.

The newly joint entity (which has yet to be named) will boast a community of about eight million freelancers — about five million from oDesk and three million from Elance. Together, the two companies have about $750 million in joint billings for 2013.

The two platforms will continue to operate independently under their separate brands. Behind the scenes, however, the older Elance seems to be taking the lead. Elance CEO Fabio Rosati will become chief executive of the new enterprise, with oDesk CEO Gary Swart assuming the role of “strategic advisor.”

Although the companies’ executives have been acquainted for many years, frequenting the same conference circuits, discussions of a merger started just a few weeks ago.

“If it’s meant to be, it happens very quickly,” noted Elance’s Fabio Rosati in a conversation with VentureBeat.

“By achieving greater scale, we can start thinking about our business to the point where we can easily see the company achieving the scale of an Amazon or a LinkedIn in this world of online work.”

The companies say the merger will help accelerate growth and enable them to better connect freelancers with the right opportunities.

“The single most meaningful advancement that will come out of our combination will be the ability to create faster and better matches between opportunity and talent, and deliver that on the shoulders of a much more extensive data science team and engineering operation,” said Rosati.

As oDesk and Elance await regulatory approval, the companies are limited in their ability to collaborate, though they’ve already agreed on some “guiding principles.” They plan to completely merge their boards and management teams, and they’re investigating moving from their offices in Redwood City (oDesk) and Mountain View (Elance) to one central location in San Francisco.

In the online freelance space, the primary Elance-oDesk competitor is Freelancer.com, which has nearly 10 million users, though the two companies also contend with design marketplace 99Designs and mini-task site Fiverr, among others. oDesk has raised about $46 million in venture capital, while Elance has raised roughly double that amount.

But that’s not the competition the companies are focused on; they’re going after the thousands of agencies that form the bulk of the $422 global staffing industry.

“Together, [our] companies have done $2 billion in a market that’s more than $422 billion,” said oDesk CEO Gary Swart. “We’re not even scratching the surface of the disruption that’s ripe for the 1.0 way of working.”

Or, in Rosati’s words: “We view ourselves as the Davids in an industry full of Goliaths.”

More information:

A pioneer in today’s freelance revolution, Elance provides an online workplace that allows businesses and independent professionals to find each other and work together via the Internet. Innovative global enterprises, small busine... read more »

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