UrbanOutsource, an online contracting service that caters to the three main categories encompassing the average household – cleaning, gardening and handyman services – announced today that it has raised $500,000 in seed funding led by Grand Prix Capital.
The startup, founded by Noga Edelstein and Elke Keeley, currently operates predominately in Sydney, with national expansion the long term plan. It works by finding licensed and experienced gardeners, cleaners or handymen for users to book online through its platform. Payment is made upfront via credit card, with everything is processed online to avoid the hassle of negotiation and time wasting.
The necessity for such services has been heavily debated as of late, especially with the demise of Homejoy, a massive player in the same space in the United States, earlier this year. Regardless, the home outsourcing services industry is a multi-billion dollar sector and every other week there seems to be a new player entering the market. In addition to Urban Outsource, the Australian market is also home to TidyMe (raised $750K) and Whizz (raised $2 million), while ASAP and Ketings merged last month.
There are other larger platforms like Oneflare and Service Seeking that have also been around for a while now, allowing customers to access similar services via a quote model. It’s a competitive industry vertical to say the least.
Urban Outsource claims to be growing revenue at 100 percent quarter on quarter, and a lot of this has to do with its focus on repeat revenue from customers each month. Right now the platform claims that 69 percent of monthly revenue is from repeat customers that have used the platform before. The founders have also been very clever to leverage their corporate backgrounds, setting up partnerships with blue chip companies like Ernst & Young where they provide home services to their employees as a benefit.
In fact, cleaning is by far the platform’s largest category. “It’s a really good entry into our other categories,” says Keeley. “We’re really focused on being the ‘get a helper for your home’ platform. We want to be able to provide everything that you need to maintain your home on a regular basis. Cleaning is a really good entry point for that and it’s a $3 billion opportunity, which is exciting.”
“There are some players in Sydney that are just focused on cleaning,” adds Edelstein. “We’ve got our eyes on the bigger prize, end-to-end maintenance, which is a $15 billion opportunity. What we find is that once people come into the network and use us for cleaning, we get a really good conversion across to our other services.”
The Urban Outsource team currently consists of four people, however part of the funding will be used to hire a CTO for the business as well as develop an in-house CRM system. Both Edelstein and Keeley told Startup Daily that they have bootstrapped the operation up until now, and have focused on getting the business profitable and putting the right systems in place in order to be in the ideal position to scale, which is where they are right now.
When it came to raising the round, the founders said that they had a lot of interest and the round was in fact oversubscribed. The two needed to make a decision as to what to do, and decided to stick with their original $500,000 plan and go with Grand Prix Capital – a strategic choice, considering the firm’s speciality around investing in marketplace style startups. The venture capital firm, led by Les Szekely, has invested into the likes of SiteMinder, HotelClub, DesignCrowd, and Oneflare.
“We decided from the start that we were interested in the value we could get from an investor and we were really looking for someone to partner with who had the knowledge, mentoring and connections, rather than simply to fundraise,” says Keeley. “We were seeking $500,000. We had more on offer but we decided to stick with our strategy of raising $500,000. We think it’s the right number at this point in time.”
The founders have also been watching the amounts raised by their competitors in the last few months and were very firm on the belief that raising too much money in this particular market could do more harm than good.
“It’s been interesting for us to watch other players in the market,” says Edelstein. “We’ve seen some [competitors] have raised quite a lot of capital but we’ve been really focused on what’s been happening internationally in the on-demand space and we’re being very strategic about not falling into the trap of raising too much money and purely using that to subsidise user acquisition.”