Not the OP but I made a similar transition a couple years ago.

I'm currently a software freelancer consultant working out of Montreal and also very interested in co-ops. The main idea behind co-ops and workplace democracy is that you can't force anyone to do anything, and every decision made should be fair for everyone involved. You can't have a co-op if anyone involved has an overly capitalistic/individualistic mindset. Likewise, in order for the group to not need excessive hierarchy, members need to be open to constructive criticism and must be devoted to doing what's best for the group as a whole even if it is bad for any one individual.

Now, at the moment, I'm an individual freelancer who occasionally hires subcontractors but I do my best to treat them better than any boss has ever treated me. I always pay above market rate for labour, and if someone's skill level is similar to mine I will happily give them the full hourly rate that I am charging out. I see this as a great foundation for building out towards a co-op.

The main issue for starting a co-op, beyond finding interested and committed people, is finding contracts to feed it. It has taken me almost 3 years to get my pipeline to a sustainable level. My understanding is that 3 years is the standard for virtually any small business, from retail to restaurants to a dentist's office, so that was encouraging.

You're right that online freelancing marketplaces are a trap. There's no good work to be found there. You have to build your network so that next time someone with a project and a budget is looking for a vendor, your name is at the top of their list. Any client who frequently buys software development services likely already has a preferred vendor, so you're going to have to fight for what's left: clients who buy software infrequently. And by their very nature, it's a purely numbers/waiting game. Another great type of client to find are those who are fed up with their current vendor. Given how expensive and generally low quality software developed at agencies tends to be, you would think it would happen more frequently but it seems most clients are unable to differentiate low quality software from high quality software.

But first, to even be considered for the contract, you need to have a decent portfolio. Nobody with a serious budget is going to risk it on someone who has never delivered a project from start to finish. This creates a Catch-22. Your best bet is to go after undesirable contracts (generally those with too-small budgets), and over deliver so that you can create portfolio-worthy pieces. At the same time, you should be building up a project template so that you can be more efficient and compete better.

It's been much harder to build up my pipeline than I had anticipated when I first set out to freelance, but the needle is moving in the right direction and I continue to be optimistic. Every year has been significantly better than the previous one! Not only that, I can confirm that I no longer feel the despair and dread from when I worked in an open-office farm with those horrific fluorescent lights. It's been replaced with its own problems, but I am far happier with my new demons.

I'm definitely interested in meeting more like minded people as well as discussing possible avenues for cooperating. We can continue here or feel free to email me at e@ericwaldman.ca if you like :)