Sydney-based home services marketplace UrbanYou has acquired domestic cleaning startup HomeHello to expand its reach further north in its quest to become Australia’s go-to marketplace for on-demand home services.
UrbanYou offers access to services like home cleaning, gardening, and tradesperson repairs, and the startup will now be absorbing HomeHello’s domestic cleaning services into its platform, also taking its customer base, providers, and intellectual property rights. HomeHello co-founders Richard Lin and Jason Pham will now be working with UrbanYou in advisory roles.
The acquisition, the price of which has not been disclosed, comes three months after UrbanYou raised $1 million to expand its operations nationally, and co-founder Noga Edelstein says the move will allow her startup to “become the biggest on-demand marketplace for home services in Australia”.
“After our raise we had the goal of accelerating growth, and this [acquisition] gave us a great platform to achieve that,” Edelstein tells StartupSmart.
UrbanYou will now be leveraging HomeHello’s existing presence in Queensland to launch its offerings in Brisbane, adding the city to its current presence in Sydney and Melbourne.
Since UrbanYou launched in 2014, Edelstein says the startup has serviced more than 30,000 properties and processed over $4 million in home services transactions through the platform.
While Edelstein declined to disclose specific acquisition figures, she says the acquisition will double UrbanYou’s recurring user base; when Edelstein spoke to StartupSmart UrbanYou had 8000 users.
Edelstein says the acquisition will also bring UrbanYou’s service provider pool to more than 1000 on-demand workers across Sydney, Melbourne and Brisbane.
HomeHello currently has fewer than 10 staff in its team and UrbanYou will not be taking on these staff as part of the acquisition.
Looking to the future, Edelstein says the startup is “accelerating rapidly” and is on track to triple its user base, bookings and revenue within the next 12 months in light of this acquisition.
“[HomeHello] have a really loyal recurring user base, and we are going to double the size of our recurring user base overnight to grow fast and enter Brisbane,” she says.
“Users will now have better access to a deeper pool of providers and our providers will have access to a much greater range of jobs.”
Winner takes all
Edelstein says the nature of the on-demand gig economy means establishing market share quickly would be crucial to UrbanYou’s success — a consideration that heavily influenced the decision to acquire Homehello.
“In an [on-demand] market situation where winner takes all, getting there first was really important,” she says.
“We had just completed the raise so the time was right.”
Edelstein advises startups going through the acquisition process to work quickly and keep a focus on the operational, rather than legal, side of the proceedings.
“People can really get bogged down in the legals of a transaction. Myself coming from legal background, I was very aware of how complicated it could be to do an M&A [merger and acquisition],” she says.
“If you’re going to do it, move fast and have a real operational focus”.
“The value in this transaction is the users”
Another key concern following an acquisition is ensuring the customers of both companies are kept informed throughout the transition process, and Edelstein advocates for maintaining a relationship of trust, openness and respect with customers during this time
“The logistics of folding one business into another takes a lot of detailed thought into how that’s going to happen,” she says.
“You have to treat customers and providers with a lot of respect, and have a lot of operational focus at this time.”
Fostering a sense of collaboration throughout the acquisition was also crucial in ensuring UrbanYou didn’t lose any of its new customers in the process.
“We worked really closely with HomeHello on that — they let their customers know well in advance of the ‘Go Live’ date so that we could prepare them for what was going to happen,” Edelstein says, adding that the reaction from both user bases has been “overwhelmingly positive”.
“The value in this transaction is the users and acquiring this additional user and provider base, so we need to make sure the messaging is appropriate and we take into account all their concerns,” she says.
“With providers, we made sure they were comfortable with what was happening, how the offering works, and what additional features would benefit them.”