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It’s your partner’s birthday, and you want to do something special for the occasion. You whisk them away in an Uber to a charming little Airbnb ( (ABNB) – Get Airbnb, Inc. Class A Report), order a romantic dinner delivered by DoorDash( (DASH) – Get DoorDash, Inc. Class A Report), and then gift a stunning pair of artisan earrings that you bought on Etsy. Sound familiar? Welcome to the gig economy.
What Is the Gig Economy?
According to the IRS, the gig economy includes an activity where people earn income by providing on-demand work, services, or goods, often through a digital platform like an app or website[1]. Gig work can include things like renting out a room or home on a short-term rental site, driving for a ride-hailing company, selling goods online, tutoring or performing a specialized professional service. For some people, gig work is a side hustle, something they do in addition to their day jobs to earn some extra cash. For others, it is their day job–it’s how they make a living.
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The gig economy encompasses a wide range of goods and services, however, they are generally divided into four primary categories.
1. Transportation-Based Services
Transportation services make up a whopping 57.8% of the gig economy in the US[2]. The main players in the field are ride-hailing platforms like Uber and Lyft, but upstarts like Juno and Via are also making their mark.
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2. Asset-Sharing Services
This is the number two sub-section in the gig economy, coming out at a bit over 30% of the total market value. Airbnb is the clear market leader, as well as the dominant economic player. Since going public in December 2020, the share price of Airbnb has increased 200%, and Airbnb’s market cap of $130 billion is larger than all other online travel booking sites[3]. Airbnb isn’t the only player either–co-working companies and other vacation rental platforms are also generating significant revenue.
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3. Handmade Goods and Miscellaneous Services
Etsy ( (ETSY) – Get Etsy, Inc. Report) is the dominant platform for handmade goods, but marketplaces like IndieCart and iCraft also have devoted consumers. The miscellaneous services category encompasses sites like TaskRabbit, Fiverr, and DoorDash as well as tutoring, home care, and anything that doesn’t fit in the other categories. Yet despite the variety, this category makes up only 8.2% of the gig economy[4].
4. Professional services
The professional services market gets a lot of attention, but surprisingly, it only makes up 3.8% of the gig economy[5]. It includes all types of professionally trained freelancers, but the design and tech fields are dominant, for example, graphic designers, website builders, writers, QA professionals, and more. There are a variety of field-specific platforms that support professional services gig workers, and general platforms like Upwork that support many types of professional freelancers.
There is some disagreement about what should or shouldn’t be considered part of the gig economy. However, no matter how you define it, there is no question that the gig economy is huge, and it’s growing at a staggering rate. Experts estimate that over half of US companies rely on freelancers or independent contractors for some aspect of their business. A 2020 survey commissioned by Upwork found that 59 million Americans had freelanced within the previous 12 months[6]. According to predictions, as much as 60% of the workforce will be independent by 2027[7].
History of the Gig Economy
The gig economy isn’t new–people have always offered various assets and services for pay without a formal employment setup. However, in the internet age, through various online marketplaces, it’s possible to offer services on a much wider scale than in the past.
Craigslist was the maverick in the field. Originally created in 1996 as a way to advertise local events, within a short time it became a marketplace for everything, including gig work. Then, in the 2000s with the advent of smartphones, gig economy apps started sprouting up like mushrooms after the rain. The gig economy exploded with massively successful platforms like Uber, Lyft, Airbnb, Etsy, and TaskRabbit that made the gig economy accessible to both buyers and sellers 24/7, from wherever they are. When the 2008 economic crisis hit, the gig economy got an additional boost. With people strapped for cash, and employment harder to find, the gig economy offered an alternative for both primary and supplementary income.
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As more sectors were “gigified”, gig work became mainstream. When the pandemic hit in 2020, the gig economy got an additional boost. The pandemic led many people to rethink their work lives and leave their 9 to 5 jobs in a phenomenon known as the Great Resignation. They often saw gig work as a more flexible employment alternative, one that would better enable them to balance their schedules with the demands of remote school and other family needs. Even after the pandemic wanes, this phenomenon is likely to have a significant impact on the economics of the future.
Investing In the Gig Economy
All this gig-based action adds up to an enormous amount of economic activity. In 2021, the gross volume of the gig economy was approximately $347 billion USD. In 2022, it is predicted to reach $400 billion[8].
Although many of us have become accustomed to interacting with the gig economy, it isn’t commonly thought of as a field for investment, despite its staggering growth. While some of the brands that consumers know and love such as Airbnb and Fiverr have made Initial Public Offerings (IPOs), the established gig economy stocks have sky-high stock prices that put them out of reach for most individual investors. Most funds don’t fully represent the sector’s growth.
The SoFi Gig Economy ETF was created to give investors exposure to this extreme-growth field. As an Exchange-Traded Fund (“ETF”), it can be bought and sold like a stock, but its net asset value is linked to the value of its composite stocks–in this case, gig economy stocks or stocks related to gig economy ecosystems. Investors can gain access to the potential of companies that have transformed the way people access goods, services, and work while mitigating the risk of buying an individual stock.
The gig economy stocks in the SoFi GIGE eCommerce ETF include companies in the following fields:
Platform Businesses
This is the field most associated with the gig economy in public awareness. This category includes app-based platforms, web-based stores, auction sites, and other commission-based platforms such as Alibaba, eBay, and Etsy.
Services and Transactions Businesses
The ETF invests in companies that supply the infrastructure of the gig economy. This includes companies that facilitate transactions and support operations such as DocuSign, PayPal, and Square.
Marketing Businesses
Marketing works differently in the gig economy. Gig workers don’t have the funds to invest in traditional media and instead rely heavily on social media and messaging platforms like Eventbrite, Facebook, Tencent, and Twitter for their marketing needs. These types of companies are also included in the ETF.
Ancillary Businesses
This category includes non-traditional companies, such as HealthEquity, that are not directly related to the gig economy but that support and/or benefit from the gig economy in some way.
The gig economy is irreverent, democratic, and responsive, reflecting the values of younger generations. The SoFi GIGE ETF offers investors focused thematic exposure to the companies leading the businesses of the future, and the potential to benefit from an ever-growing trend.
For more information on the GIGE ETF ( (GIGE) – Get SoFi Gig Economy ETF Report) its holdings and a prospectus, visit SoFi
Investing involves risks and the potential to lose principal. Shares of any ETF are bought and sold at market price (not NAV) and may trade at a discount or premium to NAV. Shares are not individually redeemable from the Fund and may only be acquired or redeemed from the fund in creation units.
SoFi ETFs are distributed by Foreside Fund Services, LLC.
[1] IRS website: Gig Economy Tax Center
[2] “Gig Economy – The Economic Backbone of the Future?”, December 28, 2021
[3] “Traders on which travel stock they’re backing as Expedia reports earnings”, February 11, 2021
[4] “Gig Economy – The Economic Backbone of the Future?”, December 28, 2021
[5] “Gig Economy – The Economic Backbone of the Future?”, December 28, 2021
[6] “Freelance Forward 2020”, September 2020
[7] “The History and Future of the Gig Economy”, November 19, 2019
[8] “Projected gross volume of the gig economy from 2018 to 2023”, January 20, 2021
