Home services

With Contractors In Excessive Demand, A Lot of Funding Is Going To Residence Providers Startups

 

For a lot of property owners, the homes we own are our most valuable assets. They’re also a major pain and constant cash drain.

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From big-ticket items like faltering foundations and burst sewer pipes to simpler fixes like scratched floors and chipped paint, our homes are regularly in need of repair. Few of us have the tools and DIY skills to do it all. And lately, it’s been challenging even to find pros to do the work.

Enter startups. Against a backdrop of rising property values, an aging housing stock, and labor shortages among home services providers, investors have been pouring money into upstart companies aiming to help with upgrading and maintaining properties.

A Crunchbase analysis of funding to US home services-focused startups in the past year found at least $1.4 billion across 23 rounds (see funding round list). We put together a sample list of companies funded in the past year, shown below:

Where the money is going

By far the largest funding recipient is ServiceTitan, a software provider for contractors in plumbing, HVAC, electrical and other specialties to generate leads and close sales. The Glendale, California-based company, founded by two sons of immigrants who built contracting businesses, raised $500 million in a March Series F round, bringing total funding to over $1 billion.

Next up is Thumbtack, an app for finding and hiring local professionals that is most popular for home services. The San Francisco-based company closed a $275 million late-stage round last month, bringing total known funding to nearly $700 million.

Neither ServiceTitan nor Thumbtack are new startups, having been founded in 2012 and 2008, respectively. However, there are also some newer players raising sizable rounds.

Super, provider of subscription plans to cover appliance and home systems breakdowns, raised a $50 million Series C in May. And Chicago-based HomeX, a 4-year-old startup that provides virtual support for home repair troubleshooting, raised its first reported institutional round of $90 million in April.

In announcing the round, HomeX founder and CEO Michael Werner pointed to home services as a $500 billion market that “remains highly fragmented and needs meaningful innovation.” He pitches his startup as a player that could bring to home services some of the kinds of transformations that telemedicine has brought to health care, by cutting down on costly in-person service calls.

HomeX isn’t the only company looking to make home services a more virtual business. HOVER raised a $60 million Series D in November to build up its service, which allows smartphone users to make an interactive 3D model of any property to measure, design and estimate home improvement projects.

Faster, cheaper, better… or at least available

As with startups in other sectors, home services upstarts are mostly marketing their offerings as a faster, cheaper or better solution than incumbents. But in the current market — with many contractors seeing more demand than they can meet — sometimes the killer app is simply having someone available to do the work.

With many areas of the economy facing labor shortages, home services are no exception. Operators of contracting businesses in HVAC, plumbing, roofing and other areas are reporting difficulty hiring and retaining employees in major markets across the country.

Home repair and remodeling costs have also been spiking, impacted by greater consumer demand and supply chain disruptions beginning amid the pandemic, alongside labor shortages.

Public markets like the space, too

Public markets also seem pretty convinced we’ll be shelling out more for home repairs and renovations.

Shares of both The Home Depot and Lowe’s — two companies seen as a barometer for consumer enthusiasm around home upgrades — are trading at around all-time highs. That’s likely another factor boosting venture interest in home services, indicative that public investors would be receptive to companies with innovative approaches to an already growing space.

Plus, our homes aren’t maintaining themselves. (Though it would be really nice if a truly innovative startup came up with a way to do just that.)

Illustration: Dom Guzman

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