The Newest Source Of Startup Funding – The Sharing Economy


A version of this article previously appeared on Forbes.

The broad implications of the sharing economy are only beginning to be felt. The ability for people to turn their time, residences, cars and other personal assets into viable income streams is revising the traditional definition of “employment.”

The sharing economy is also proving to be a significant source of bootstrap startup capital. In the past, a struggling entrepreneur’s options for paying the bills were limited. Part time jobs typically generated minimal income while requiring the entrepreneur be at a specific place at a specific time, thus restricting their ability to work on their venture.

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Sharing While Caring About Your Venture

In contrast, the sharing economy affords entrepreneurs the flexibility to work on their ventures during their peak hours of productivity while generating working capital from multiple sources.

Want to monetize your roommate’s parking space while they are at work? can help. Could you use some cash driving strangers around town during your downtime? Lyft and Uber will provide you with the necessary infrastructure and allow you to keep most of the money you earn. Have time on your lunch hour to run some errands? Entrepreneurs  using TaskRabbit earn an average of $60 per odd job.

The sharing economy is not only a good fit for entrepreneurs’ lifestyles, it also offers them outsized financial rewards. One entrepreneur who is taking advantage of this new paradigm is Courtney Walker, Founder of Callie + Caston. Courtney has been driving for Uber for nearly a year. When I asked her why, she noted that, “Uber allows me to work when I have free time and doesn’t impair my focus on my venture. I am in the early stages of launching my company, so there are often times when I have to wait on vendors, suppliers and other third parties before I can make additional progress on my clothing line. Thus, being able to episodically work, when I have the energy and the time, is a great relief.”

Sharing Leads To More Sharing

Tradesy, one of the fastest growing sharing economy companies, was initially funded by the sharing economy. Tradesy allows women to sell their clothing and accessories online, thereby recycling their wardrobes while generating incremental cash. (Note: I am an investor in Tradesy via Rincon Venture Partners.)

Tracy DiNunzio, the company’s Founder and CEO, was an early adopter of the sharing economy. Soon after Tracy launched Tradesy, her roommate departed with no notice, leaving her wondering how she was going to pay the rent, let alone bootstrap her business. According to Tracy, “There was this new website called Airbnb that had just come out. So I took stock and I said, ‘Well I have this nice place on the beach and there are two bedrooms. What if I slept on the couch, and rented both bedrooms out?’ I made a quick spreadsheet, and I said, ‘At 80% occupancy, I’m making money here. Okay, I’m opening a hotel.'”

Tracy was initially tentative about allowing strangers into her home, saying, “The first two guys that inquired, I just got weirded (out) and I said, ‘Sorry, it’s occupied.'” Eventually, Tracy’s cash flow desperation fortified her resolve and she accepted the inquiry of a musician, after he sent her a song as his “reference.” In Tracy’s words, “I listened to the song and because the song was pretty good and I really needed the money, I said, ‘Okay fine’ and 17 hours later, my husband walked in.” Thus, Tracy not only funded her business to profitability by leveraging the sharing economy, she also met her life mate.

Tracy’s remarks are taken from a talk she gave to a group of aspiring entrepreneurs at UC Santa Barbara. You can watch an 8-minute excerpt from Tracy’s talk below.

As Tracy experienced first-hand, the sharing economy allows entrepreneurs to bootstrap their businesses more effectively while also affording them the time and flexibility to accelerate the growth of their ventures.

There is no doubt a small army of entrepreneurs who are quietly funding their startups by driving for Uber, selling clothing on Tradesy and doing odd jobs on TaskRabbit, all of which beat the hell out of flipping burgers or waiting tables. This trend is not only good for entrepreneurs, but for society as a whole.

Follow my startup-oriented Twitter feed here: @johngreathouse. I won’t tweet a photo of a killer burrito I am about to devour – just startup stuff.

Image credit: Baruch Moskovits from the Noun Project

John Greathouse

John Greathouse is a Partner at Rincon Venture Partners, a venture capital firm investing in early stage, web-based businesses. Previously, John co-founded RevUpNet, a performance-based online marketing agency sold to Coull. During the prior twenty years, he held senior executive positions with several successful startups, spearheading transactions that generated more than $350 million of shareholder value, including an IPO and a multi-hundred-million-dollar acquisition.

John is a CPA and holds an M.B.A. from the Wharton School. He is a member of the University of California at Santa Barbara’s Faculty where he teaches several entrepreneurial courses.

Note: All of my advice in this blog is that of a layman. I am not a lawyer and I never played one on TV. You should always assess the veracity of any third-party advice that might have far-reaching implications (be it legal, accounting, personnel, tax or otherwise) with your trusted professional of choice.

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