With $50M Funding, Handy Focuses on Existing Markets

For New York-based Handy, which offers on-demand cleaning and other home contract services, density has been key to its growth.

The company thinks of that density in two ways: Like any business, it wants to attract as many customers as possible. But Handy is also seeking to have as many contractors who clean apartments—a service that accounts for 80 percent of Handy’s current business—available to meet the demand from customers.

By increasing both, Handy’s CEO and founder Oisin Hanrahan says customer experience factors, such as letting customers book the exact time they want for appointments, dramatically improve. Already, Handy accepts 95 percent of customer requests for cleaning times—say, 8 a.m. on a Thursday—without having to ask customers to reschedule the appointment because no cleaners are available, he says.

It’s also a boon for the contractors who work for Handy because they want to be listed on the marketplace with the most customers so they can have flexibility in their work schedule, Hanrahan says.

“We deliver a better experience to customers because we have more density than anyone else,” Hanrahan said in a telephone interview. “This really is a density game. There is nobody doing more on-demand home cleaning or home services than Handy.”

Investors seem to agree. This week, Handy closed a $50 million Series C round of funding led by Fidelity and Research Company, as well as participation from existing investors TPG Growth, General Catalyst, Highland Capital, and Revolution Growth. With the new round of funding, Handy has raised more than $110 million since it was founded in 2012. (It was previously known as Handybook, even as late as last year when Xconomy profiled the business.)

Hanrahan says the money will enable Handy to continue to fuel its growth; the startup logged its millionth booking in July. The company said at the time that its annual run rate had increased to $52 million, up from about $3 million after it was founded.

Hanrahan cites “density” as the reason why his company has found success, even as competitors have fallen off the map. That includes Homejoy, another cleaning service based in San Francisco, which decided it would shut down operations in July. Homejoy’s executives told Re/code that it was closing its operations because the company couldn’t raise a large enough venture capital round to keep its operations going. It also cited potentially costly lawsuits it faced, which were related to classifying workers as contractors instead of company employees.

Hanrahan declined to comment on any competitors, including Homejoy, even in the context of why his company might be able to raise funds while a competitor said it had to shutter its doors because it couldn’t do so. Fidelity does not comment on individual companies, a spokesman said.

While Handy been successful so far, it hasn’t been immune to the lawsuits that seemingly helped sink Homejoy. BetaBoston reported in July on a lawsuit that was filed against Handy by a woman who said she was paid less than minimum wage and forced to cover basic costs of her job. Slate took a deep dive into the trials and tribulations the startup has undergone in its three-year rise, including reports of disgruntled employees and reports that the company perhaps grew too quickly.

In fact, lawsuits have been prevalent in this on-demand industry that uses contract work as a way to limit costs, as Xconomy’s Bernadette Tansey reported this summer. Hanrahan declined to comment on anything related to any lawsuits, but did say his company—which uses all contract workers for the cleaning and in-home services—would work with legislators at the state and federal level on a “great solution” about how employees are classified.

Handy may soon find itself facing some new competition from larger companies—including from tech giant Google, which hired about 20 of Homejoy’s employees in July as the Internet search giant prepared to begin offering its own service to match local professionals with its users, Re/code reported.

Hanrahan declined to comment on Google’s potential entrance into the market.

Hanrahan says the startup is focused on expanding in the 28 markets it already serves, rather than expanding into new ones, Hanrahan says. Right now, 10,000 “independent” professionals complete 100,000 bookings each month through Handy, the company says. Homejoy had 1,000 cleaning contractors in July, according to Re/code.

Handy’s model of market expansion “allows you to have better economics, allows you to raise more capital,” he says.

Hanrahan said Handy will wait at least six months before offering its service in any new markets. “We focus more on how to take what we already have and make the individual experience better,” he says.

David Holley is Xconomy's national correspondent based in Austin, TX. You can reach him at dholley@xconomy.com Follow @xconholley

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