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Home services platform Thumbtack raises $275M on a $3.2B valuation to double down on home management

On the heels of making an acquisition in December of home management startup Setter, Thumbtack — one of the pioneers in the home services gig economy — has raised a big round to double down on the model. The company has raised a fresh $275 million, money that the company plans to use to built out a home management and maintenance business alongside its network of home services professionals. Co-founder and CEO Marco Zappacosta confirmed that the round values Thumbtack at $3.2 billion.

For some context, this is nearly double the valuation Thumbtack had when it last raised money, a $150 million round led by Sequoia in 2019. It also comes on the heels of a strong 2020, where its revenue grew more than 50%. Thumbtack’s gross revenue (what’s paid in service fees, not Thumbtack’s cut) is now on track, it says, to cross $2 billion this year.

This latest funding is being led by the Qatar Investment Authority (QIA), with participation also from Blackstone Alternative Asset Management (BAAM) as well as G Squared. Previous backers Ballie Gifford, CapitalG, Founders Circle Capital, Sequoia Capital, and Tiger Global Management also invested.

The funding and shifting focus of the company underscore some of the changes we have seen among consumers in the last year.

In large part, because of Covid-19, most of us have been staying home — which has often included also moving to new homes to accommodate spending so much more time in them — and, as Thumbtack sees it, that has led many more people to paying more attention to how to make those homes better places, and to keep them in better shape overall, and why it sees a big opportunity — alongside being a marketplace to find pro’s for one- off jobs you might need done around the house — in providing a “home management” platform to cater to that new attention.

“It’s pretty wild that people’s homes their biggest assets, the most complicated thing you’re responsible for, but it doesn’t come with a manual,” Zappacosta said in an interview. “When you think about your car, you need to do regular service. Otherwise, you may have to pay a big emergency bill [to fix something]. That same concept applies to the home. But there’s never been an easy way to know what you should do, how much to pay for it, and then easily get it done. So that’s what we’re doing.” The services include emergency repairs of electrics in the home, plus preventative maintenance that you may need to do to on your property, he said.

The move into home management is an interesting turn for another reason, too: it’s a sign of how Thumbtack is playing into a bigger change in how many consumers engage with services overall, and that is by way of subscriptions. That is to say, while many of us will still go out and shop for items, or go to a cinema, we are all also subscribing to at least one video-on-demand service, many of us may well also have Prime accounts to get Amazon’s various perks, and so on. If we are subscribing everywhere else, why not throw home maintenance into the mix?

Thumbtack, now over ten years old, is thought by many as one of the earliest movers in the gig economy space to focus on home services. That has not come without challenges, however. As we reported back in 2019, the last round was a tough one for the company and looked like it might come in at a flat valuation. That was on the heels of many others in the space — competitors of Thumbtack’s that included not just other startups but also heavy hitters like Amazon and Google — also fizzling out in their own efforts in home services.

And Covid-19 proved to be a huge challenge for Thumbtack, too, which laid off 250 people in March last year.

Yeah, look, it was a roller coaster of a year,” Zappacosta said. “In the early phases of COVID, there was so much fear that many just shut it all down. People said, ‘I’m not going to have anybody in my home.’ And so those months were really scary — March, April — because it was unclear how long that was going to last. And so we made adjustments to ensure that we sort of would stand the test of time.”

However that changed later in the year, he continued. “Once people began getting more comfortable with masking up, and all the precautions, you know, demand did start to come back. And so by June, July, we saw ot get back to normal levels. And then you know, what happened is the big investments that we’ve been making in the platform in the last few years to make the hiring experience, much more e-commerce, like really began to pay more and more dividends.”

He said that 2020 was Thumbtack’s third year of accelerating growth, “which is sort of surprising given that Covid was in the middle of that. And so the momentum that we’re carrying out, is we’ve never been in a stronger position.”

The company now is focusing on where it might best use technology to get the upper hand with its platform, which competes not just with other home services provider marketplaces, but also a growing number of upstart and incumbent “home management” providers like Super, which raised $50 million last month. One interesting idea that Zappacosta described to me, which may well be part of a later phase of development, involved providing a way for customers to “tour” their homes so that Thumbtack could get a better idea of the space and what needs attention to better personalize its home management to the home and user in question.

That will keep the company working also in the U.S. he said. Globally the home services and repair market is estimated to be worth some $500 billion annually, and amazingly the U.S. represents a massive 40% of that value.

 

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