With Contractors In High Demand, A Lot of Funding Is Going To Home Services Startups – Crunchbase News
For many property owners, our homes are our most valuable asset. They are also a huge pain and a constant drain of money.
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From bulky items like wobbling foundations and burst sewer pipes to simpler repairs like scratched floors and chipped paint, our homes need regular repairs. Few of us have the tools and home improvement skills to do it all. And lately it has even been a challenge to find professionals for the job.
Enter startups. Against the backdrop of rising property values, an aging housing stock, and a labor shortage at home service providers, investors have poured money into emerging companies looking to help modernize and maintain properties.
A crunchbase analysis of funding for US startups focusing on household services last year found at least $ 1.4 billion in 23 rounds (see list of funding rounds). We have compiled an exemplary list of companies that have received funding over the past year, see below:
Where the money is going
By far the largest recipient of funding is ServiceTitan, a provider of home improvement software in the plumbing, HVAC, electrical and other specialty areas to generate leads and close sales. Founded by two sons of immigrants who built contractors, the Glendale, California-based company raised $ 500 million in a Series F round in March for total funding of over $ 1 billion .
Next up is Thumbtack, a local talent finding and hiring app that is most popular for home services. The San Francisco-based company closed a $ 275 million late-stage round last month, bringing the total known funding to nearly $ 700 million.
Neither ServiceTitan nor Thumbtack are new startups that were founded in 2012 and 2008, respectively. However, there are also some newer players who raise substantial rounds.
Super, provider of subscription plans to cover device and home system outages, raised $ 50 million in Series C in May. And Chicago-based HomeX, a four-year-old startup offering virtual home troubleshooting assistance, raised its first reported institutional round of $ 90 million in April.
Announcing the round, HomeX founder and CEO Michael Werner pointed to home services as a $ 500 billion market that “remains highly fragmented and in need of meaningful innovation.” He presents his startup as an actor who could bring some of the transformations telemedicine has brought to healthcare to home services by reducing costly in-person service calls.
HomeX isn’t the only company looking to make home services a more virtual business. HOVER raised $ 60 million for the D Series in November to build its service that enables smartphone users to create an interactive 3D model of any property to measure, design and estimate home improvement projects.
Faster, cheaper, better…. or at least available
As with start-ups in other sectors, start-ups in the home services sector usually market their offers as a faster, cheaper or better solution than established companies. But in the current marketplace – where many contractors see more demand than they can meet – sometimes the killer app is simply having someone available to do the job.
With many sectors of the economy facing labor shortages, domestic services are no exception. Contractor operators in the HVAC, plumbing, roofing and other sectors report difficulties in hiring and retaining employees in key markets across the country.
Home repair and remodeling costs have also skyrocketed, influenced by greater consumer demand and supply chain disruptions after the pandemic, as well as labor shortages.
Public markets like space too
The public markets also seem pretty confident that we will be spending more on home repairs and renovations.
The shares of The Home Depot and Lowe’s – two companies known as barometers of consumer excitement for home upgrading – are trading at around all-time highs. This is likely another factor driving business interest in home services, suggesting that public investors would be receptive to businesses with innovative approaches in an already growing space.
Plus, our homes don’t sustain themselves (although it would be really nice if a really innovative startup found a way to do just that.)
Illustration: Dom Guzman
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