BETA
This is a BETA experience. You may opt-out by clicking here

More From Forbes

Edit Story

BuildZoom Raises $10.6 Million From Formation 8, Y Combinator To Focus On High-End Home Improvements

This article is more than 8 years old.

In the last two years, companies have raised hundreds of millions of dollars to address the so-called “home services” market, a more than $400 billion a year industry that encompasses everything from window cleaning to television installation. To date, entrants in this crowded market have included Thumbtack, a San Francisco-based local services marketplace that banked $125 million last month; Seattle-based Pro.com and Porch.com; and public corporations like Amazon.com and Angie's List.

On Wednesday, San Francisco's BuildZoom jumped into the fray by announcing that it raised $10.6 million in a round led by Formation 8. But instead of focusing on what its cofounders called "lower-end," "easily-commoditized" services, the Y combinator-backed startup said it will be focused on remodeling projects, where the median budget is around $19,000.

"We’re not going to try to do everything and we're not going to do small maintenance," said cofounder and President Jiyan Wei. "We want to deal with high-stakes transactions and we want to nail this."

Those "high-stakes transactions" can range from full bathroom remodels to full HVAC renovations, jobs that typically require city permits and experienced contractors. BuildZoom, founded in 2012, finds those contractors by sifting through government permitting databases to determine their work history as well as accurate pricing data. BuildZoom said it has about 85,000 contractors signed up for its platform nationwide and matches 2,500 home owner projects to workers every month.

Sources close to the company said that funding valued the company at more than $50 million. Wei declined to confirm deal terms, and instead stressed that his company was differentiating itself by using machine algorithms to collect data beyond the reviews and recommendations of the other marketplaces. Formation 8's Joe Lonsdale, who joined BuildZoom's board with the investment, said that the company's data helps to solve what is currently a "miserable experience" for the average consumer.

"It's pretty simple math: Where is most money spent in the home services market?" he said, explaining his reason for backing BuildZoom in a field of multiple players. "The remodeling space is capturing a great deal of it."

Formation 8 was joined in the round by Peter Thiel's Founders Fund, which is also an investor in Porch, and Y Combinator, the famed incubator which announced in July that it would be funding its companies past their seed stages. President Sam Altman explained that the incubator had already done several pro-rata deals to maintain their stakes in post-seed companies, though BuildZoom was among the first.

"We'll continue to invest in companies until they reach a post-money valuation of $250 million," he said, noting that he was attracted to BuildZoom for its cofounders Wei and David Petersen. Petersen, BuildZoom's CEO, had previously started ImportGenius, a provider of trade import and export data.

While industry sources said that the company has had various acquisition overtures from the likes of Thumbtack, HomeAdvisor and Porch, Wei said the company is not interested in selling. The company saw revenues for the 12 months ending in September grow 800%, said Wei, though he did not disclose hard numbers.

The company's latest round brings its lifetime funding to nearly $15 million.

Follow me on TwitterCheck out my websiteSend me a secure tip