More Benefits For All Employees

In the US, the three largest pieces that contribute to a healthy society are tied to full time employment: financial stability, health coverage, and opportunities for education. As the labor landscape shifts more to part time and contract work, it creates a gap for the 1099 and part time workers seeking these services.

The chart shows 18% of the employed workforce work less than 35 hours a week. This chart excludes 1099s or part-time employees that work more than 40 hours a week across one or multiple jobs. (Source: https://www.advisorperspectives.com/dshort/updates/2017/02/06/the-ratio-of-part-time-employed-remains-high-but-improving)

Full time employers attract and retain talent by offering easy access to or subsidized plans for the following:

  • Health programs: health insurance, disability, workers compensation
  • Financial programs: 401k, transportation reimbursement, equity as a non-accredited investor, pensions, stock options
  • Training and education: education reimbursement, on-the-job training, specialized skills, learn and earn programs
  • Family benefits: child care or reimbursement, paid leave, paid sick leave

Access to these benefits is lost or limited if you are not employed in a traditional full time job. Though government will continue to play a role in providing access to benefits, we believe the more interesting opportunity is for tech entrepreneurs to fill this gap with a profitable and sustainable business to continue to meet changing needs.

The existing market offerings for individuals to patch together benefits, insurance, and financial services are difficult to navigate and still rely largely on paper to set up. Even tools that only cater to full time employees are stuck in a web 1.0 model. The path to change will likely involve many separate players focused on niche services.

A great example in healthcare is Oscar Health. They set out to change the way people obtain health insurance by making it easier to understand and sign up for. They began with a more bottom up approach by selling to individuals first, before they expanded to selling a B2B product. This approach ensured that they were satisfying the needs of individuals, full time employees or not, before expanding to serve employees of large enterprises. They started with any individual before offering a product exclusively for W2 employees. 

Finding ways to make it easier for more people to access these outside of their employment creates a powerful way to serve a population that have the potential to be more loyal to your service than they are to one employer. Already Millennial and Gen Y employees are reported to have 45% job turnover, representing a low percentage of employer loyalty. There is a huge market to be served.

Better online tools, easier administration, and leveraging data across a broad group of customers is still missing for many of these services. Entrepreneurs passionate about the need to serve part-time and contract employees have a lot of room to provide tech-enabled services and build a big business. Those superior solutions may end up creating better alternatives for W2 workers as well. Better tech in employment services and benefits is a win for everyone.

The 1099 Workforce, a Labor Market Opportunity

There comes a point when a high skilled employee reaches a point of deceleration on growth and the career trajectory is focused more on depth of expertise and knowledge. The employee realizes that they could potentially do this work for themselves and the idea of taking the grand leap to setting up an independent practice is exciting and intimidating.

We believe there is an opportunity to serve the highly skilled independent consultant workforce. One of the biggest pain points from people that take the leap to set up their own practice is sales or simply keeping the top of the funnel full and utilization rate high. An engineer is not a specialist in business development or sales as they would rather focus on the work they are best at accomplishing.  

The investment opportunities we seek should address the pain of access to customers and increase in full time utilization.  Unlike the gig economy, which has proven to be mostly true for supplemental income roles only, i.e. picking up uber shifts in off hours.

We are focused on full-time high skilled labor. As an example, we invested in WorkRails, which helps software companies deliver professional services. They are also providing opportunities to qualified expert consultants, which addresses the utilization rate pain point. WorkRails does much more for consultants to increase utilization, manage payments and eliminate marketing costs. They let the consultant focus on the delivery of their work freeing their time to do more.

People want to focus on the work that matters to them, not the sales pipeline, back office pains or administrative burden. We continue to review more interesting startups, marketplaces and creative concepts that address the potential of highly skilled talent to set up their own practice. If you are addressing this pain in any form, then we would love to hear from you.

Borderless Ecommerce Trends

We wanted to share thoughts on the emerging trend of borderless ecommerce as we look for innovations in the space. Given the current political climate, borders and trade rules are an increasing area of volatility.

From manufacturer to consumer, global logistics is well over a trillion dollar market and retail ecommerce sales is pushing two trillion dollars globally.  We are seeing the movement of tech companies to support borderless ecommerce, technology used to bridge transactions where geographical borders prevent trade. The global market is a great opportunity for these companies and we have heard time and again as to how companies would like to set up an office in China to seize the local market opportunity, which is currently growing at 10% YoY.  We believe the US should participate in the global market, however, if the US is prevented from participating in the near term, we believe there is still a massive global opportunity for these emerging tech companies.  

Several entrepreneurs are focusing on the push to give consumers access to buy anything online, worldwide.  Innovations for this problem are emerging as: access to the consumer via curated marketplaces, interface layers to transact with US retailers typically blocked, SMB tech tools to intelligently process payments from international processors, and technology to increase shipping efficiency, especially cross-borders.

We see an exciting opportunity to expand ecommerce but are still looking for a defensible platform to solve this problem at scale.  We find that many companies struggle to attract one side of the marketplace and do not have a clear strategy on how they will grow it. They bring highly qualified expertise for one side but then tend to go too broad in their target audience on the other side or they believe the early traction they achieve in one market is repeatable in any similar market.  

We believe companies that use the borderless mindset to bring existing high-demand products online for the first time are in the best position to scale.  A successful company in this space will require the alignment of an expert entrepreneur, shared belief in tech adoption and distribution, and market focus.  

Lattice Ventures Fund I Closed

We are thrilled to announce that Lattice Ventures Fund I closed in December 2016. Brittany and I started out to raise a fund based on the belief that network effects businesses needed the right investors to leverage their expertise and networks to reach the company’s goals. We decided to focus on startups that were addressing low tech markets where billions of dollars transact on outdated tech.

We also saw an overwhelming market opportunity where seed stage founders continue to face a steep fundraising learning curve without the focus of long range planning for funding. We wanted people to stay motivated by getting the right deals and raising a sufficient amount of funds. That is why we invest early. We are pre-seed and seed stage investors. We create alignment with founders on day one and work alongside them with the same level of tenacity we did in our previous roles (if not more!).

Prior to starting Lattice, Brittany and I had worked together for eighteen months on an invite-only community for founders. Held monthly, it was selective and focused on fundraising. After working together on this program we saw the benefits of what we could bring to the table as a team and decided the time was right for a new fund in New York.

This is our initial fund and we look to build the Lattice Ventures brand with our fellow collaborators and the right partners in the New York tech ecosystem. We want to work with the great founders that are aligned with our values and fit our thesis.
Reach us anytime: brittany@lattice.vc or vanessa@lattice.vc