Home services marketplace startup UrbanYou turned down $2 million in funding in favour of being acquired by another marketplace, and while the decision wasn’t easy, co-founder Noga Edelstein says the deal is a fast-track ticket to the startup’s business goals.
The Sydney-based startup has been acquired by Oneflare, another online marketplace that connects consumers with professionals to provide quotes for various jobs.
Launched in 2014 by Edelstein and co-founder Elke Keeley, UrbanYou started out as an on-demand service platform for household cleaning and gardening in Melbourne, however the founders have always set their sights on providing more services to a wider customer base.
In June last year, the startup raised $1 million in Series A funding in just two weeks, and in the year since it has built up its presence in Melbourne and acquired domestic cleaning startup HomeHello, bringing its services to Brisbane too.
According to Edelstein, the goal is to become the number one marketplace for home services in Australia, and joining Oneflare is the way to get there.
Edelstein and Keeley were about to close on a $2 million funding round when Oneflare approached them unexpectedly with the proposition, leaving them with a difficult decision to make.
“Turning down money does not come naturally to startup founders, and we weighed our options carefully,” says Edelstein.
However, ultimately they saw Oneflare as the catalyst that could help them achieve their business goals in the shortest time.
The choice was between going through successive rounds of funding and taking “a slower path” or taking the leap with Oneflare, which Edelstein says already has 1 million users per month and 100,000 verified businesses.
“We had already achieved product-market fit. Our priority was fuelling the rocket to achieve scale and liquidity in the fastest possible time frame,” she says.
“When reviewing both options, we decided the strategic value of merging with Oneflare would enable us to supercharge our growth trajectory and catapult UrbanYou into market leadership position.”
While Edelstein cannot disclose the terms of the deal, or any information about UrbanYou’s current revenue, she says negotiations were more focused around whether the combine UrbanYou and Oneflare teams would work together effectively.
“We were very well aligned,” she says.
“Any negotiation has its difficult parts, but I think we saw very quickly that the team worked well together.”
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Equally, the business models and founders’ visions for the future were in sync.
The way consumers interact with technology is changing, she says, adding: “We all felt that the future is on demand.”
A natural evolution
For Edelstein, the acquisition is the start of a new era. It’s “a little bit like sending our baby off to university”, she says.
However, rather than feeling sad, Edelstein says she’s “happy and really proud”, embracing the opportunity to “grow the business in a much better resourced and high-growth environment”.
Both UrbanYou co-founders will sit on the Oneflare executive team and are ready to hit the ground running; there’s plans to expand the UrbanYou offering nationwide, introducing new categories of services into their markets and looking into which service offerings can be delivered online.
“It’s happened really fast — we’ve already moved into the Oneflare office,” Edelstein says.
“It feels like a natural evolution, we got everything we wanted overnight,” she adds.
Whether startups want to scale through partnerships and potential acquisitions or not, Edelstein’s advice is to “really take time to know your market, to know your competitors and treat them like colleagues”.
And it’s only partly a case of keeping your friends close and your enemies closer. Edelstein says you can learn a lot from communicating with other players in the market, and nurturing relationships with them.
Treat competitors kindly and “you never know where opportunities could come from”, she says.