Forget handymen and housekeepers, SERVIZ raises a $12.5M Series B to bring on-demand to skilled home services

By Michael Carney , written on December 16, 2014

From The News Desk

The on-demand economy is hot, with money flowing into the space to disrupt nearly every vertical industry. The latest company to cash in on the trend is SERVIZ, a Los Angeles-based home services marketplace founded by the team behind local marketing pioneer ReachLocal. SERVIZ today announced $12.5 million in Series B funding, bringing its total capitalization to $20 million in just two years.

The latest round was led by PointGuard Ventures with participation from existing investors Andy Sheehan, Stibel Investments, and SERVIZ founders Zorik Gordon and Michael Kline. The company‘s Series A was led by Groupon, who did not participate in this round.

SERVIZ is the result of a spinout of ReachLocal subsidiary ClubLocal. The company has been in development in various iterations for approximately two years, but the most recent standalone version launched in July of this year and has booked 10,000 appointments in the half-year since, with a 50 percent monthly growth rate. SERVIZ is currently operating in Los Angeles and Orange County, but the plan is to use the fresh capital to expand to the top 20 geographic markets over the next 12 to 24 months.

“We’re going after the skilled categories like plumbing and electrical, rather than the handymen and home cleaning services that a lot of our competitors focus on,” Gordon says. “People have avoided tackling these problems because they are complex transactions with multiple service SKUs – these are things that can really burn your house down. What we’ve found in our early testing is that consumers want more coordination and more transparency into their service provider, pricing, and the work being done before booking. And that’s what we’re providing.”

SERVIZ works only with licensed, established service providers, most of which are independent technicians and small business owners. The company interviews and vets each partner, insuring not only their competency but also insurance and legal and financial background checks. Then, by standardizing pricing and services across its platform, the company promises its technicians more stable booking and offers consumers savings over market pricing for the same services

“From our perspective, there will be on-demand disruption of nearly every category of consumer service,” Gordon says. “We’ve already seen Uber, Instacart, HomeJoy, and others raise massive rounds and grow their businesses substantially. We’ve proven there’s similar unmet demand for easy access to skilled home services and that our model is ready to scale.”

SERVIZ will compete in many of its service categories with existing startups like HomeJoy, HouseCall, HandyBook, and other existing startup booking platforms. But none of these companies has reached significant scale or market share as to prevent SERVIZ from competing. Like the existing home services market, the on-demand category is highly-fragmented and in desperate need of a market leader.

Gordon and Kline’s experience at ReachLocal should prove to be a sizable advantage as they look to scale SERVIZ. ReachLocal expanded its operation into more than 60 global markets and at its peak commanded a market cap of more than $750 million in 2011 (it’s now just $92 million). Then again, managing physical service technicians and the variability and liability of in-person, in-home services is a different animal than online advertising. As Uber and others have demonstrated, in this arena what can go wrong, will go wrong. SERVIZ will need to get its operational house in order, something this new round of funding will be key in doing.

“These guys have proven their ability to execute,” says PointGuard Ventures Managing Director and new SERVIZ board member Krish Panu. “They are technically competent, metrics driven, and understand local as well as anyone. Combine that with this market opportunity – dynamic, mobile, location-based booking is the new reality. When we looked at SERVIZ we saw a business that is unique, highly efficient, and ready to scale. They’re combining the pricing transparency and customer experience of Amazon with the convenience and efficiency of a proprietary on demand booking application like Uber.”

SERVIZ is currently addressing just a handful categories – plumbing, electrical, appliance repair, carpet cleaning, handyman, holiday lighting, and mobile phone repair, with garage door repair coming soon – but plans to expand to cover the top 20 home repair categories within the next 12 months. The promise is that in each case, booking will be easier than with traditional methods and pricing will be both lower and more transparent prior to booking.

“We think this business will require far less human capital per market than ReachLocal did,” Gordon says. “We’re able to centralize so much more today. But we’ll need to have people on ground to interview the technicians, market locally, etc. That’s why we raised this round. And if we’re successful, you’ll see us raise again. Home services was always a top vertical for ReachLocal. We’re looking at a $1 trillion global market opportunity.”