Sydney startup TradieSpec has closed a $500,000 seed funding round, 12 months after the COVID-19 pandemic forced co-founder and chief Tim Cullen to put growth plans on hold.
In March last year, Cullen and co-founders Richard McDonald and Matt Deeks made the agonising decision to pull the plug on their first major capital raise, in the face of the pandemic and the economic uncertainty ahead of them.
“We were staring down the barrel,” Cullen tells SmartCompany.
But despite everything, the business has grown considerably over the past 12 months. And, not only has the startup finally closed the round, it’s kept the same investors on board, and collectively, they’ve poured in twice as much.
TradieSpec is a platform offering fully kitted-out rental utes to tradespeople, either on a three- to 12-month lease or for short-term hire.
The rentals are intended to either cover tradies while their own vehicles are being repaired, or to give a leg up to those starting up new businesses and who may have struggled to secure credit for their own wheels.
As it turned out, government support for the construction industry meant there was plenty of work for those tradies.
At the same time, the banks tightened up their lending criteria, particularly for small businesses. For TradieSpec, it was an unexpected perfect storm.
“We were inundated with this influx of demand,” Cullen says.
Soon, the startup had more than doubled the number of vehicles in its fleet from 44 in March to 95 today. All of those are booked out and on the road most of the time, the founder says.
The business has also pushed ahead with its expansion plans, and now has what Cullen calls “a minor footprint” in Melbourne and Brisbane.
Over the next 12 months, the plan is to establish a more permanent presence in those markets, and to grow the fleet to 250 vehicles.
Cullen is also already gearing up for his next, larger private equity raise in the not too distant future.
They say hindsight is 20/20. Clearly, 12 months ago, none of us knew what was ahead, or what the economic effects of the COVID-19 pandemic would be.
Perhaps there was no need for Cullen and his co-founders to be quite as cautious. Were they too hasty to call off their funding round the first time?
Looking back, Cullen doesn’t think so. Even knowing what he does now, he says he would have done the same thing again.
There was always a risk that the business would have slowed down considerably. He didn’t want to be in a position where he and the team were “using someone else’s money to just survive or carry losses over”.
The cash was always intended to fuel rapid growth.
“I couldn’t confidently tell those investors that was going to happen.”
The co-founders have also, perhaps inadvertently, proven their own integrity, and their respect for their investors.
They’re here to build a sustainable business, not to burn cash.
“I like to think they saw that our heart was in the right place with it,” Cullen notes.