Thumbtack Raises $275M at $3.2B Valuation

Thumbtack Secures $275 Million to Expand Home Management Services

Following its acquisition of home management startup Setter in December, Thumbtack – a leading platform in the home services gig economy – has successfully raised $275 million in a new funding round. These funds will be strategically allocated to enhance its home management and maintenance offerings, complementing its existing network of home service professionals.

Valuation and Growth

Co-founder and CEO Marco Zappacosta has confirmed that this investment values Thumbtack at $3.2 billion. This represents nearly a doubling of the company’s valuation since its previous funding round in 2019, a $150 million raise led by Sequoia.

The company experienced substantial growth in 2020, with revenue increasing by over 50%. Thumbtack’s gross revenue, encompassing service fees, is projected to surpass $2 billion this year.

Funding Details

This latest funding round comprises both primary – designated as “Series I” – and secondary capital. While the specific allocation between the two remains undisclosed, filings in Delaware indicate a Series I authorizing new shares totaling just over $158 million, according to Prime Unicorn Index.

Investors Participating in the Round

The funding round was spearheaded by the Qatar Investment Authority (QIA), with significant participation from Blackstone Alternative Asset Management (BAAM) and G Squared. Existing investors, including Baillie Gifford, CapitalG, Founders Circle Capital, Sequoia Capital, and Tiger Global Management, also contributed to the round.

Shifting Consumer Trends

The funding and the company’s evolving focus reflect significant shifts in consumer behavior over the past year. The increased time spent at home, driven largely by the COVID-19 pandemic, has prompted many individuals to prioritize home improvement and maintenance.

Expanding Beyond One-Off Jobs

Thumbtack recognizes a substantial opportunity to move beyond simply connecting users with professionals for individual tasks. It aims to establish itself as a comprehensive “home management” platform, catering to the growing demand for ongoing home care and upkeep.

“People’s homes are their biggest assets, yet they lack a comprehensive guide for responsible ownership,” Zappacosta explained. “Just as cars require regular servicing, homes do too. We’re creating a solution to simplify knowing what needs attention, understanding associated costs, and efficiently getting it done.”

Services Offered

The services will encompass both emergency repairs, such as electrical issues, and preventative maintenance for properties. However, the focus will not include large-scale renovation projects like bathroom refits.

The Rise of Subscription-Based Services

This move into home management signifies a broader trend towards subscription-based services. Consumers are increasingly embracing subscriptions for entertainment, shopping, and other needs, and Thumbtack believes home maintenance is a natural extension of this model.

Thumbtack’s Journey and Challenges

Having emerged as an early player in the gig economy focused on home services, Thumbtack has faced its share of obstacles. A 2019 funding round was reportedly challenging, with a potential for a flat valuation. Competitors, including established companies like Amazon and Google, have also experienced difficulties in the home services sector.

The COVID-19 pandemic initially presented a significant hurdle for Thumbtack, leading to a workforce reduction of 250 employees in March 2020.

Navigating the Pandemic and Rebound

“The initial months of the pandemic were marked by uncertainty and fear,” Zappacosta admitted. “Many homeowners postponed services, creating a challenging period. We implemented adjustments to ensure our long-term viability.”

However, demand rebounded as people became more comfortable with safety precautions. By June and July, service levels had returned to normal. Investments in the platform’s hiring experience, designed to resemble an e-commerce model, began to yield positive results.

Strong Momentum and Future Outlook

2020 marked Thumbtack’s third consecutive year of accelerating growth, despite the pandemic. This momentum has positioned the company for continued success.

The company is now concentrating on leveraging technology to strengthen its platform, competing with both established marketplaces and emerging “home management” providers like Super, which recently secured $50 million in funding.

Future Innovations

Zappacosta mentioned a potential future development: enabling customers to virtually “tour” their homes. This would allow Thumbtack to gain a better understanding of the property and personalize its home management recommendations.

Focus on the U.S. Market

Thumbtack will maintain its focus on the U.S. market, where the home services and repair industry is estimated at $500 billion annually, with the U.S. accounting for a substantial 40% of that total.