Lancers produces $200 million freelancing gigs so far and it is still growing

Founded by Akiyoshi Yosuke (pictured below) in 2008, Lancers claims to be Japan’s largest freelancing site, producing over $200 million worth of accumulated freelancing gigs to date.

As a student freelancer himself in 2000, he found that it was a pain to find gigs. And while he was working for Nifty after he graduated, it gave him perspective from the other side of the table as a client. It was so hard to find good freelancers to work on ad hoc projects. In 2008, frustrated that there was no solution available, Yosuke decided to start Lancers, an online marketplace where clients can meet good freelancers.

He coughed out $90,000 and hired some engineers to build his site. Time was tough back in 2008 as it wasn’t the most ideal business environment for internet companies in Japan. But internal problems were Yosuke’s main curse. The contract with his engineer expired, leaving him stranded. With no one to help him, Yosuke took time to learn PHP and built Lancers all by himself.

Fighting against the odds

With the site up, Lancers needed clients. While Lancers does offer a very reasonable pricing for freelancers, Japanese corporates are typically very risk adverse. Instead of providing a hiring model from the start, Lancers started to gain trust by allowing companies to crowdsource their problems to freelancers.

Freelancers who are interested will submit their work to the clients but only one will be picked and get paid. The competition model worked out well for Japanese corporates and Lancers gathered more successful case studies which helped to attract even more clients.

Finding clients brought upon another problem. With projects coming in, Lancers needed to find a way to accept payments online. Using the escrow payment model made sense. Clients pay Lancers, which will only release the money to freelancers once the job was completed.

Escrow payment wasn’t new in Japan as e-commerce sites selling physical goods were already using it. But somehow the banks didn’t feel comfortable about Lancers using escrow payment for services. So they didn’t approve transactions made by Yosuke’s startup.

“It was a huge problem but we kept fighting because crowdsourcing is not well known in Japan back then. I’ve to convince the banks that escrow payments for services is actually the same as physical goods. Thankfully, I managed to do it,” said Yosuke.

Profitable and growing

Lancers is now profitable every year despite having no external financing until recently. It was only in May 2013 when Yosuke accepted a $3 million investment from GMO Ventures Partners and Globis Capital.

Yosuke explained that the money was raised to launch new features and also to speed up Lancers’ growth. On October 2013, Lancers recorded $100 million worth of accumulated freelancing gigs. On January 2014, that figure doubled to over $200 million.

Yosuke says that even his competitor, Crowdworks’ transaction volume is “two to three times smaller than Lancers’.”