SkillSoniq is raising capital by offering common equity at a $10.3 million valuation. This amount is somewhat high compared to other startups currently seeking funding. However, it is more reasonable when viewed in context with SkillSoniq’s most recent revenue of more than $350,000. Balancing these factors against each other, the price score for SkillSoniq is moderate.

There is not one single market that SkillSoniq truly fits into. Instead, investors should look at the company through the intersection of two markets. The first of these is the freelance space, since freelancers will account for the majority of the app’s users and as its primary source of revenue. 

Last year, an estimated 41% of the American workforce performed at least some freelance work, a healthy increase from 28% back in 2013. In 2021, the expectation is for this amount to grow to 42%, and by 2027, it should climb to 50.9% of the American workforce. However, only about 28% of the freelance workforce is full-time. What’s really interesting is that today’s youth are the trailblazers in the freelance market. Among millennials, 40% freelance on a full-time basis, and 53% of working-age Generation Z do as well. This is not to say that freelancers are not willing to consider a full-time position. In one poll, 51% of freelancers said that no amount of money would convince them to transition into a full-time job, but 29% said that a pay increase of less than $5,000 annually would convince them to do so. A further 6% said that a pay increase of between $5,000 and $19,999 per year would be needed.

More companies are becoming interested in the freelance market. Of Upwork’s 17 million users, five million are client companies. Of the companies that do hire freelance workers, the largest share — about 36% — are located in the US. This is great for SkillSoniq given that it launched in New York. 

The other market to look at is the recruitment market. According to one source, the online recruitment market was worth $28.68 billion in 2019. With growth expected to average 7.1% per annum, the industry should rise to $43.49 billion by 2027. An important niche that SkillSoniq definitely fits in is the recruitment software market. This opportunity was worth about $1.75 billion in 2017, but with an annualized growth rate of 7.4% expected of it, it should climb to $3.10 billion by 2025.

Given the favorable characteristics of these markets and the sizable and growing shift toward freelancers that society is seeing, SkillSoniq’s market score is its highest across all five metrics.

While there are multiple individuals working on building up SkillSoniq, the core player is Abby Verma. He presently serves as the “Partnerships Lead.” At present, Verma is also a member of SHRM, an HR membership association. Previously, he worked as a technology and digital transformation consultant for EXL. There, he helped to digitize and optimize certain corporate functions for the firm’s clients. This experience is valuable since it shows that he understands how to address the needs of a variety of firms. The HR membership, meanwhile, ties right in to what SkillSoniq is working on. 

Also in the past, Verma was the co-founder and director of Tutoring “D” Street, an India-based firm that offered technology training programs to no fewer than 12 cities in the country. This, too, gave him experience addressing a company’s hiring needs. Before that, Verma was a senior manager of corporate finance at Yes Bank. There, his work involved financing deals in different verticals. Naturally, this granted him exposure to how companies in other industries operate. Similar experience was likely gleaned from his private equity investment analyst role at ICICI, and his credit risk manager role at GE Capital.

While Verma’s experience is solid, the fact that he is the only core member of the team does weaken the profile of the business some. Thus, the team score for SkillSoniq is middle of the road.

SkillSoniq’s idea of trialing freelancers with the end goal of assigning the right one a full-time post seems novel. However, it is unclear if this goal will be fulfilled given the resistance freelancers have indicated when it comes to transitioning to a more permanent fixture at a business. 

SkillSoniq’s other claim about using AI to match candidates to jobs isn’t all that unique, though it could have some positive impact on the company’s business model if it works better than competing technologies. Beyond that, there is not a great deal that is different. Like Freelancer.com, Upwork, and other job or freelance recruitment portals, SkillSoniq connects workers with projects. It’s very difficult to be wholly original on that front. As a result, SkillSoniq scores slightly below average in the differentiators metric.

One area where SkillSoniq has done well has been on the performance side. In its first year, the company signed up more than 6,000 freelancers to its platform. Today, that figure is over 12,000 and has since expanded to four additional cities. More than 300 companies have signed up for the app as well. SkillSoniq has landed strategic collaborations with companies like WeWork and trupo. Other partners include universities like Cornell and Tuck, as well as coding academies like Actualize and App Academy.

One weak spot on the performance side, though, is the company’s financial performance. In 2019, the business reported strong sales of $367,297. This compares to $5,882 in 2018. Over this timeframe, the company’s net loss narrowed from $20,080 to $613, and its operating cash outflow improved from $20,038 to an inflow of $5,080. While all of this is great, the tough 2020 economy saw revenue lower to around $300,000 and net loss, by our calculations, rise to $67,910. As a note, these 2020 figures have not been audited and have been, instead, posted by management to their offering page. Despite this decline, the overall performance of the firm has been strong. Thus, SkillSoniq’s performance score is above average.

While SkillSoniq is an interesting business, there are some bearish items for investors to consider. First and foremost, the price that management is asking investors to accept on the deal is a bit lofty. The management team is really a one-person gig, adding substantial risk to the endeavor. SkillSoniq’s platform is also not significantly different from other solutions in the space today. Lastly, it’s unclear just how deeply COVID-19 has affected the company and how growth would have looked in the absence of the pandemic.

On the bullish side of the equation, there are plenty of items for investors to be happy about. The market the firm operates in is attractive. What’s more, the industry should become even more geared toward the services it offers. Its product does have some points of differentiation, and its performance, all things considered, should be applauded. Investors should not expect the company’s financials to show profits that are in the green for an extended period, but the fact that it did narrow losses and cash flows from 2018 to 2019 is encouraging.

SkillSoniq has created an app to connect freelance workers via AI with projects they are well-qualified for. The companies those freelancers work with can also use the work to see if the individual would be a good long-term fit. Freelance work is expanding, and the recruitment market offers ample opportunities for a company like SkillSoniq. However, the company is essentially a one-man operation, which brings unnecessary risk. Additionally, the app is not strongly differentiated from established competitors like UpWork. All in all, SkillSoniq is a Neutral Deal at this time.

For questions regarding the KingsCrowd staff pick or ratings for this company, please reach out to support@kingscrowd.com. 

Analysis written by Daniel Jones.