Lystable on the Move: New Series A Funding and a Talk With CEO Peter Johnston

funding patpitchaya/Adobe Stock

Since mid-2016, we’ve only heard a few reports about work platform business Lystable, and there has been almost no news about Lystable in the press to date. That is, of course, until the company announced recently that it had completed a $10 million Series A round, bringing total funding to $21 million and doubling the company’s valuation since June of last year.

To get a sense of what Lystable was up to, we arranged a call with founder and CEO Peter Johnston to obtain his insights.

Lystable Background

A U.K.-based start-up, Lystable got its start in late 2014 with a $2.1 million Venture Round, followed just several months later by a $1.5 million Seed Round, which included Valar Ventures. A year later, to expand into the U.S. and continue to scale the business, Lystable has secured an $11 million Series A Round investment that was led by Valar Ventures and included Goldcrest Capital and Spring Partners. Clearly, Lystable had gotten a good blast off from the launch pad.

Now with an additional $10 million in fuel supplied by lead investor Valar Ventures, SciFi VC (formerly HVF Investments), Kindred Capital, Goldcrest Capital, Glynn Capital and Wilmont Ventures, Lystable may be getting closer to escape velocity.

Spend Matters has been covering Lystable since it first sprung into the work intermediation platform scene in May 2015:

Conversation with Peter Johnston

As noted above, the new funding event provided us with a good opportunity to reach out to Johnston and get updated on where Lystable is today.

Johnston told us that the company has been operating somewhat under the radar, but it has been growing. Staff has grown to about 40 people, and the number of freelancers on the platform quadrupled over the course of 2016. Currently, he said, the company serves about 2,200 companies. According to published sources, these include companies like Google, Airbnb, IDEO, The Economist and a host other known entities, though it is not clear of the scope of adoption across any given client business.

Putting the above in some context, Johnson said that Lystable’s model has been “to provide a technology solution that businesses can leverage to manage their freelance workforce in one place. In effect, managers at companies that already use freelancers — and will perhaps be using more — are doing so with spreadsheets, a lack of project management tools and so on. Lystable provides those managers with a platform and tools to do all of that, including budget tracking and invoice processing and payment. Lystable’s reported growth in client businesses and number of freelancers is driven by businesses both adopting the solution and bringing on more freelancers.”

Johnston told us that after initially going to market with a broader solution focus (think something more like a VMS), the team learned that this was not what businesses were really looking for.

“The demand, he said, “was more from actual business managers who needed a kind of consumerized platform and toolset to allow them to easily manage their growing number of freelancers. There was not much need for just another system of record, but rather for a platform that would not only address the usual employment aspects of freelancers (like most old school FMS products) but would also enable engagement and collaboration along with strong management capabilities, a way of integrating freelancers with their existing workflows and tools, hence Lystable’s new label as a ‘Freelancer Collaboration Platform,’ or FCP.”

According to Johnston, the company has been taking this approach over the past nine months or so, and the business has been accelerating. Johnston also noted that the company has been sharpening its market focus, directing itself toward a particular talent vertical, namely freelancers who produce digital work outputs in the technology and media sector. Lystable also recently relaunched its website and modified its pricing model, which include making a version of the core product totally free to customers, with the option to bolt on their premium features such as paying freelancers.

Johnston also mentioned the VMS/Supplier Management Hub model — once explored by Lystable — was not the way their data and client feedback was demanding they go.

“The next generation of freelancer management capabilities will be pulled into existence and shaped by business users to meet their needs,” he said. “Providers of FMS platforms tried to impose a model that conformed to ‘enterprise requirements’ — but enterprise management had too many questions and could not get onboard, and there was a disconnect with what business users really needed.”

We feel like we are on the right path now,” Johnston told us. “The future we are looking at is one where enterprise solutions will be driven by and evolve with the tools that business users are adopting (as has been the case with mobile devices), and not the other way around.”

“The new funding,” Johnston added, “will allow us to build out the team working on freelancer payments, as well as add some engineering and product hires in London. Namely we will hire a number of key executives in 2017, which we will announce very soon.”

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Voices (5)

  1. Julio Bedetti:

    Even the best of the cars, or the ones in aviation, have room to increase scope and find or open better doors, every new concept brings a lot of questions into the view of the potential investors, so, if there is a corner that needs to be trim off or smoothed that does not imply that the concept will get into failure, anything new will generate interest and will deserve some confidence even in the event of bumps along the development of it; good approach and control may substitute the lack of trust empowering the inicial idea…..

  2. Ronald Helk:

    Andrew, there is a misunderstanding of Lystable situation here. That business shift is a clear proof of failure regarding their first model and puts under question the FMS market/model as we know it.
    It seems that Lystable hasn’t figured out their model yet and $22M seems like too much money for a company that hasn’t found its market fit.
    I have a lot of other red flags in this story but I’ll stop here as I’m unsure too. I’m looking forward to reading the next episode in 6 months but nothing sounds good so far and we should avoid calling this a success.

    1. Andrew Karpie:

      Ronald,

      Thank you for your astute comments.

      First, just want to be clear that this is a report about the funding round and a CEO interview. It does not represent our analyst viewpoint.

      The other thing I would say is that this platform space is still in a rather seminal state, so I think that the overwhelming majority of these businesses are trying to find their place and get their footing. It kind of goes with the start-up territory. And we always have ask ourselves what is the investors’ perspective.

      For a bit of my general perspective, see: http://spendmatters.com/2017/01/24/untimely-demise-fms-gone-buried-forgotten/.

  3. nico lewis:

    great article andrew! it’ll be interesting to see how their success inspires competition. who are their biggest rivals at this point?

    1. Andrew Karpie:

      Nico, I think it’s too early in the game to even define competitors.

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