Level Raises $1.5M to Support Gig Workers' Finances

Level Secures $1.5 Million Pre-Seed Funding to Support Gig Economy Workers

Level, a Seattle-based startup focused on providing financial solutions for those engaged in the gig economy, has announced the completion of a $1.5 million pre-seed funding round this morning.

The company’s initial offering centers around a financing product designed to extend credit to gig workers who may encounter difficulties accessing it through conventional financial institutions.

Innovative Financing Model

Level’s approach mirrors revenue-based financing utilized by startups. Workers can obtain funding and repay it through a percentage of their future earnings. This allows access to capital based on current freelance income.

Beyond immediate financing, Level envisions expanding its services to include offerings such as insurance products tailored for gig workers.

Reframing the "Gig Economy"

Level’s CEO, David Edelstein, articulated in an interview with TechCrunch that the company prefers to view itself as supporting the growth of small businesses operating within various labor marketplaces, rather than solely focusing on the “gig economy.”

This perspective is grounded in the fact that Level isn’t targeting drivers for large platforms like Uber. Instead, it collaborates with freelance platforms like Dolly (moving services), Porch (home improvement), and SmartHop (trucking).

Targeting Specific Needs

Level’s financing is particularly relevant for workers who require specialized equipment, such as trucks or tools, to perform their jobs.

For example, a moving professional seeking to invest in a new truck could potentially secure capital from Level to facilitate that purchase. Edelstein noted that many users experience increased earnings after investing borrowed funds into their businesses.

Loan Amounts and Repayment Terms

Users can access up to $10,000 through Level’s service, although the company identifies a “sweet spot” of around $2,000. This amount is often difficult to secure through traditional credit cards, yet remains significant for its customer base.

Repayment typically occurs over four months, with a portion of earnings – ranging from 5% to 15% – allocated towards debt settlement.

Incentivizing Early Repayment

Level offers a unique incentive for rapid repayment. If a borrower repays their advance within six weeks, the company refunds half of the originally agreed-upon fee.

This policy is driven by a desire to build trust and encourage users to explore additional services offered by Level in the future, ultimately lowering their overall capital costs.

Reducing Fees and Expanding Services

The company has already reduced its standard capital fee from 10% to 7%, with potential for further reductions, possibly even to the break-even point.

Edelstein envisions credit as a gateway to a broader suite of products and services offered by Level.

Future Outlook

With the recent capital injection, secured in late December 2020 from co-lead investors NextView and Untapped, Level has increased flexibility in product development.

The rollout of insurance products is planned for Q2, with broader availability expected in Q3.

Investors and Support

Techstars, Acumen, and Ascend.vc also participated in the funding round.

The Employment Technology Fund is providing support for Level’s credit facility, which has the potential to grow significantly as the company scales.

A Global Trend

Level’s approach is comparable to that of American Heru, another company focused on providing enhanced services, including insurance, to workers outside of traditional full-time employment.

Success in this area could spur the emergence of similar companies worldwide.

Clarification on Terminology

Update: Following publication, a discussion with the company clarified their preference for the term “advance” over “loan.” Their rationale, based on “purchasing future receivables,” led to this update.