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So, you are a photographer, freelance writer, designer, or any kind of solopreneur. How do you manage your business? How many apps do you use for tracking orders, accounting, communicating with clients, and other routine tasks? And how much time do you waste keeping them organized?
Aiming to make it easier for small businesses in the creative fields to manage their processes with an all-in-one platform, HoneyBook announced today it raised $28 million in Series C funding.
The round was led by Citi Ventures, with participation from repeat investors Norwest Venture Partners, Aleph, Vintage Investment Partners and Hillsven Capital.
“Freelancers make up one-third of America’s workforce today, and this number is projected to grow to 50 percent in the coming years,” HoneyBook’s co-founder and Chief Executive Officer, Oz Alon, said to VatorNews. “Our partners at Citi Ventures are aligned with our vision to better serve these solopreneurs by creating new products and services that will help them succeed. One thing we’re particularly excited about is the potential for HoneyBook to now offer our members better access to financial services and even capital.”
With offices in San Francisco and Tel Aviv, the six-year-old startup allows its customers to manage projects, book clients, send invoices and get payments on a single platform. Last year, it increased its customer base by 150 percent and hit the $1 billion mark in business deals booked through the platform.
“As the shift toward independent work continues to rise, the needs of this modern workforce segment are evolving,” Luis Valdich, Managing Director and Venture Investing Lead at Citi Ventures said in a statement. “HoneyBook’s holistic platform is uniquely positioned to serve the growing number of creative freelancers who are operating their own businesses and we are excited to be part of its journey.”
Alon told VatorNews how HoneyBook will use the new funds, how it differs from other financial management platforms, and where it all began.
VatorNews: How was HoneyBook able to grow its customer base so fast?
Oz Alon: HoneyBook’s growth can be attributed to the changing nature of work in America and great product-market fit. More and more people are freelancing and starting their own businesses, and this segment of the workforce is growing at three times the pace of the traditional workforce. But these solopreneurs have a lot of pain points starting and running a business on their own.
HoneyBook streamlines the client communication and booking process, getting people paid more quickly. It frees up time that freelancers usually spend on administrative tasks, so they can focus on their passion.
Essentially, there is a rapidly growing market of customers, and we’ve been able to create a solution that addresses their needs and helps them be more successful.
VN: How do you plan to use the proceeds of this fundraising?
OA: We’ll be investing in product developments to better serve our customers. As we visit our members in their homes and at their workplaces, we’re hearing that they still have some pain points that we want to do our best to solve. We’re already rolling out new product updates and features every week to meet this need, and the fundraising and partnership with Citi will allow us to create even better solutions more quickly to continue delighting our customers.
VN: Who is the platform’s primary user?
OA: HoneyBook was built with freelance and solopreneur service providers in mind. To this demographic, time is money, and 80 percent of the time they’re stuck doing things they just don’t want to do, or they’re not good at doing. That’s four out of five business days spent handling invoices, customer communications, proposals, tracking, and other mundane activities. Our all-in-one platform caters to anyone who freelances or owns a business, whether you’re a web designer, business consultant, freelance writer, or a photographer.
VN: What is HoneyBook’s business model?
OA: Our business model is directly tied to our customer’s success; our interests are very well aligned. Customers pay a monthly or annual subscription fee for the software, and a 3 percent fee for processing online transactions that is in-line with industry standards.
HoneyBook is in the business of making things easier, not harder, for our members – so our business model is fully transparent and very simple.
VN: What was the biggest challenge the company had to overcome to get to where you are today?
ОА: Historically, small businesses had a bad experience with online payment platforms and accepting credit cards in general. They didn’t like the time lag from accepting the payment to having the funds land in their account, they didn’t like the fees, and they definitely didn’t like it when there was a chargeback and no one was there to fight for their money. Early payment platforms lost a lot of the SMBs’ trust.
We needed to prove that HoneyBook is a different type of company. For starters, we will always have their backs and that the fees are justified by the tremendous value they get by using our platform. Having more than $1 billion of their bookings on our platform shows we were able to surmount those challenges and that solopreneurs trust us.
VN: What excites you the most about your role at the company?
OA: Visiting and talking to our customers. I try to spend as much time as possible engaging with our members in their natural environment - at their homes, studios, a coffee shop, or a shared workspace.
I’m constantly inspired by their passion for their craft and their persistence in overcoming obstacles to be successful. Hearing directly how HoneyBook is helping them grow their business is incredible and listening to the needs they still have reminds me of the great opportunity we still have in front of us.
VN: Who is your main competitor and how is HoneyBook different from other financial management platforms?
OA: There are companies that offer aspects of what we do, but none that have created a true all-in-one solution like HoneyBook.
For example, there are payment companies that only manage the transactions portion, and there are project management solutions that help freelancers keep track of their projects. People also use spreadsheets and do manual invoicing.
Where we’ve innovated is by consolidating every aspect, from customer relationship management (CRM) to payment, in a single, seamless platform. When members sign up for HoneyBook, they’re cutting down the time it takes to book a client dramatically, and those who use our automations shorten that time by another 20 percent. So, we’re helping our members get booked more, and faster, and do their job better because they’re freed up to focus on their craft.
What’s more, because our platform manages all aspects of running a business, we’re able to offer our members insights that help them uplevel their business. Before HoneyBook, our customers were using a bunch of different platforms to run their business. But these are siloed and disparate, making it near impossible to efficiently learn across platforms for insights.
We’ve also seen that community matters to Millennials and Gen Z. We’ve built a trusted community – 75,000 strong – creating even more added value.
VN: What are some cultural or technological tailwinds that propelled the startup’s progress?
OA: Entrepreneurship has always been in America’s DNA, and small businesses are the backbone of this country. We’re also seeing millennials and Gen Z really lean into the entrepreneurial spirit, in large part because they prioritize flexibility, independence, and the freedom to pursue their passions on their own terms. Research shows that 49 percent of millennials would rather start their own business than work for someone else -- and this is what we’re seeing on our platform, too: 81 percent of our members are millennial and Gen Z.
The advent of technologies like HoneyBook is making it more accessible for this entrepreneurial generation to actually do what they love to do and build a business through it, creating value for a growing crop of younger entrepreneurs.
On top of that, we’ve found that millennials want to use the products and tools that their friends are using. Our community has become that advocate for us and has also become a constant source of inspiration and feedback that allows us to create products that solve their needs.
VN: What helped form the idea behind HoneyBook?
OA: My wife, Naama, is my co-founder. We were both solopreneurs ourselves: she was a web designer, and I owned a bar.
We experienced firsthand how mundane and time-consuming tasks like bookkeeping and invoicing took up 80 percent of our time, leaving us only one business day a week to do the thing we loved and actually went into business to do.
Later, while planning our wedding, we experienced from a consumer point of view just how cumbersome it was to pay vendors for their services and coordinate with them in general. It struck us that solopreneurs and freelancers are a traditionally underserved portion of the economy, so we decided to build a solution for them – and us – specifically.
VN: Where do you see the company in five years?
OA: We’re growing rapidly, with our membership climbing 150 percent year-over-year. With more Gen Z entering into the workforce and starting their own businesses, I’m anticipating that this growth will only accelerate.
VN: HoneyBook was recently named by FORTUNE and Great Place to Work as a top five small and medium Best Workplaces in the Bay Area. Why do you feel that creating a healthy work environment is important in this competitive environment?
OA: The environment has become even more competitive because not only are employees free to work for another employer, they’re also increasingly ditching the traditional 9-to-5 altogether to work for themselves. For companies that want to retain talent, I believe that it’s all the more important to create a strong company culture that values the same things your employees do. And, increasingly, that’s flexibility, mobility, and passion-driven creativity in order to be a compelling place to work.
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HoneyBook is the leading financial and business management platform for solopreneurs and freelancers. Over 75,000+ creative entrepreneurs connect through its platform to manage their business, collaborate and book clients -- all in one place. HoneyBook enables creative entrepreneurs to focus more on doing what they love and less on administrative tasks like invoicing and payments. From the first reply to the final payment, HoneyBook makes it easy for people to book their ideal client faster, more frequently, and with less legwork. Founded in 2013, HoneyBook is based in San Francisco and funded by Citi Ventures, Norwest Venture Partners, Aleph, Vintage Investment Partners and Hillsven Capital.
Joined Vator onLeading a team of innovators, big thinkers and creative problem solvers on a mission to help small business owners succeed doing what they love. We're building tools that empower solopreneurs to run their business on their own terms.