In 2023, the projected gross volume of the gig economy is set to reach $455.2 billion.
But few of them have a secondary revenue stream like Handy.
Here is how they leveraged theirs to raise over $110 million:
Handy is much like other gig economy companies, where they connect people to specialists in cleaning, handiwork, plumbing, electrical, moving, and even furniture assembly.
And it's a very successful business model.
They serve people across 28 cities from the US to UK and Canada.
Handy has facilitated millions of bookings, had more than half a million customers, and activated nearly 100,000 independent contract professionals.
Effectively, they are the Uber of household tasks.
By charging fees for services, of course.
Handy will give you a quote based on the type of service you want, how big a job it is, and the region in which you're located.
Handy is a marketplace that connects professionals and customers, so all Handy Pros are independent contractors.
That means you aren’t a Handy employee.
You aren’t guaranteed a set number of hours, benefits, paid time off, or a yearly salary.
However, Handy professionals earn between $12 to $35 per hour, depending on the job. Top professionals earn more than $1,000 per week.
If you figure that Handy takes a cut of these fees, it's easy to see how they make all that dosh.
Handy isn't pocketing the vast majority of these service fees though.
Because everyone providing a service through the platform is treated as an independent contractor, Handy is essentially the middleman.
So, like many similar services in the gig economy, Handy takes a small cut of the customer's payment before passing on the rest to the worker.
Handy calls this the "booking fee," and doesn't share anywhere on its site (as far as I could tell) whether this is a flat fee or a percentage rate.
They also collect various penalty fees "to enforce platform standards."
Both service professionals and customers are liable to pay penalties if they reschedule without enough notice for example.
But there's another way that Handy makes money - and it's known as Cash Out Now.
Cash Out Now payments are triggered instantly by Handy and processed by most banks within one to two business days.
Basically how it works is the customers pay Handy up front for the service.
The money is held in escrow until the job finishes. Some jobs could take weeks or months.
Handy will store the cash in a bank and allow investors to bid on the revenue stream from the marketplace to earn a yield as an alternative to fixed-income products.
This is why they want all their users to use the “Cash Out Now” feature. It aggregates all the money over time to one place where there is consistent revenue.
Recently, Handy was recently acquired for an undisclosed amount but has an estimated evaluation of more than $360 million dollars.
And while they aren't immune to controversy, they are introducing new approaches to the gig economy model.
TL: DR Handy takes more than a cut of the booking fee - it's Cash Out Now feature stores the cash in a bank and allows investors to bid on the revenue stream from the marketplace to earn a yield as an alternative to fixed-income products.