Unbabel, a marketplace for translation services, announced it's just landed a $1.5 million Series Seed round from some pretty notable VCs, including Matrix Partners, Google Ventures, IDG Ventures and many more. The new round comes several months after the startup graduated from Y Combinator earlier this year. It's also not just from angels, but VCs that focus more often on Series A.
"We don't do seed very often," said Jared Fliesler, a recent Partner at Matrix Partners, who spent much of his career at high-profile companies, such as Square, Slide and Google. "I invest when I know the founders or if I love the industry," which Fliesler would categorize as "vertical labor markets." This category applies to platforms that connect freelancers in specific industries with the organizations that need them.
Watch out oDesk. I think Fliesler is looking for startups that might disrupt your domiant freelance platform.
In Unbabel's case, the marketplace connects freelance translators with companies that are looking to get documents translated. The attractiveness for this service is that the translation service slashes traditional prices. Typically, the cost to translate documents is 10 cents a word, said Vasco Pedro, Unbabel’s co-founder and CEO. But Unbabel costs 2 cents a word. "We're massively reducing costs," said Pedro.
The first 150 words are free. In this example, it took one hour to translate 65 words.
Now, of course, this would have taken minutes on Google Translator.
But for company FAQs, or company documents that really need accuracy, it's worth paying for the guarantee of accuracy. Knowing that there's a human component to the translation process is comforting. But over time, Unbabel hopes the technology part gets smarter.
By allowing technology to do part of the translation initially and then giving the rest to freelance editors, Unbabel is betting the system will be more efficient as human editors correct work, which is put back into the system, where the technology can learn from its mistakes, thereby reducing the amount of words human editor's have to change in the future, and resulting in an overall faster and cheaper process.
Translators get $8 an hour, which increases over time through a rating system by both editors and customers. For each translated document, there are two editors. Already, 8000 editors across 11 languages have signed up to help translate documents for 150 customers. Not bad for just launching in January. Some customers include Yummly, which uses Unbabel to translate recipes. Unbabel also signed a partnership with Matrix-backed Zendesk, an outsourced platform for customer service.
By using Unbabel, you can scale without having to hire a person for every country you support," said Fliesler. "It also gives you burst ability [by increasing your ability to handle active times without having to hire additional translators]."
Unbabel does face challenges from a myriad of competitors, as do all upstarts. For instance, VC-backed Smartling offers an elegant solution. But it's less of a marketplace and more of a work-flow platform that allows big organizations with their own translators to use it, said Fliesler. These large enterprise clients are where significant business can come from. But whether they get comfortable with freelancers they can't really control doing the work may be something that only time and culture can change.
The challenge for marketplaces like these, just like any service, is just the accuracy of the service. Eventually, if companies like Unbabel prove to have a reliable brand, then going for big contracts won't be hard. That's why the peer-review and customer-review system, much like Uber has in place, is so important to establishing integrity throughout the marketplace.
But in a world where many small business can have an international presence, business from large enterprise companies isn't necessary to get big.
"The problem with the global village is that you'll have more companies having international presence earlier," said Pedro. "They'll produce a lot of content that will be too hard to translate."
As Fliesler puts it: "As the world gets flattened by technology, every company has to think about how to communicate with all users, when they live all over the world."