Digital matchmaking start-up Catalant has received a new round of capital investment. The Boston-based firm which helps companies select and engage with consultants has raised an additional $41 million in new investment, as the group’s Series D funding round draws to a close. The new injection brings Catalant’s total financing to more than $73 million.
Formerly named HourlyNerd.com, the start-up is one of the best known marketplaces for freelance professional services talent in the United States. Established in 2013 by Co-CEOs Rob Biederman and former Booz Allen Hamilton consultant Patrick Petitti. The pair were keen to provide a more personalised and efficient service than clients would obtain directly from traditional management consultancies. According to Petitti, “I would go to a customer site every day, sit in a windowless conference room with two people who were just out of college, and we were told to deliver business value… It’s not uncommon for people to spend the first half of a project getting to know an industry.”
Since then, the company have built a global network of more than 40,000 independent consultants and boutique firms specialising in research, strategy, marketing, finance, sales, operations and product initiatives. The large system of professionals enables Catalant to provide a matchmaking service tailored to compliment clients’ internal talent, enabling users to find on-demand talent for specific initiatives, or to close a longer-term talent gap – an essential service, particularly for small and mid-level enterprises.
To use its platform, customers upload project details and wait for individual professionals and boutique consultancies to bid. They choose who to contract, based on criteria like an expert’s resume, proposed price and a star rating from other businesses which have used the expert. While these reviews undoubtedly help with recommendations to other users however, they are not the only filter at play. The platform’s algorithms also monitor how long Catalant customers actually spend viewing an expert’s profile, with low average viewing times also pushing consultants down the digital pecking order.
Catalant face increasing competition from fellow freelance management platforms like Talmix and Toptal, which also match companies with business experts, along with rivals Comatch, a platform established by two German McKinsey alumni, which raised $4 million in financing to tap into the emerging market in 2016. Meanwhile consulting firm BCG also purchased a minority stake in financial services matchmaker Opportunity Network, as the new segment continues to draw interest from major backers. 70 of Catalant’s 150 employees are salespeople, and with the growing number of contenders in the sector mean it plans to spend its $41 million on a much needed boost in marketing and R&D for its software.
SMEs in the UK alone collectively spend around £60 billion per year seeking external professional service expertise, yet the same businesses also suggested more than £12 billion of that figure was wasted on unnecessary or bad advice that did not correspond to their actual needs. Efficient consultant/client matchmaking services have therefore become anticipated as the next hot commodity, with firms keen to invest in such projects across a range of sectors, and Catalant is in a prime position to take advantage of this with their increased marketing clout.
The product doesn’t just help smaller clients however. While the marketplace brings in more than 90% of Catalant’s revenue, the company boasts a fast growing by-product service, where a large firm can use the platform to catalogue their current staff and their skills, presenting skill-gaps at larger clients with increased precision. This enables larger, less agile businesses to weigh up the capacities when filling internal projects in the short-term, or consider where long-term recruitment drives are necessary.