- It is usually believed that venture startups are when you don’t earn anything but grow only through investments 😉 Some time ago, it was indeed the case. But the situation has changed. Now, no one just gives away money; you also need to earn it.
- This has prompted investors and startups to start paying attention to sectors where you can both earn and grow simultaneously. And also apply new business models and technologies. And here’s the interesting thing.
- One of the promising sectors for this turned out to be the old good repair—whether it’s equipment or houses and apartments. And right now, you can get into this topic if you look at these examples:
Project Essence
“Maintaining an expensive home is hard work. But we can help with that!” claims HomePoint.
The startup is ready to take on all the work associated with keeping a home in good condition – from minor tasks like hanging a picture, fixing a shower, or replacing filters to cosmetic and major repairs.
Homeowners can summon craftsmen as needed. Additionally, specialists will visit homes quarterly for routine check-ups and annually for a more thorough inspection – to determine what needs preventive maintenance or repair.
In essence, preventive maintenance is almost a fundamental function of the service. Because timely preventive maintenance means avoiding longer and more expensive repairs.
The startup claims that the schedule of preventive work is based on data analysis. They have accumulated enough data on the viability of homes and the performance of home equipment to know what, when, and for what reasons things typically fail – and to prevent it in a timely manner.
For this reason, the service operates on a subscription model. The homeowner pays a certain amount for maintenance per year, and the service strives to ensure that nothing in the house breaks or malfunctions during this time.
The subscription fee includes preventive inspections and minor repairs. If the home or equipment actually needs repair, then separate payment will be required for the materials and corresponding work.
The subscription cost depends on the size of the house and ranges from $2,160 to $5,130 per year. Quarterly payments will be 10% more expensive.
The service currently operates only in the area of one city, Austin, Texas. Moreover, they have been doing this for several years without attracting any investments. And only now have they decided to raise the first $2 million in investments to begin expanding their services to other territories.
What’s Interesting
Operating on a similar subscription-based home maintenance model is the startup Honey Homes, about which I wrote last summer. They have already raised $12.1 million in investments.
The main difference between today’s HomePoint and it is that they focus exclusively on “luxury” homes.
The reason is that, as HomePoint claims, owners of expensive real estate have to pay more for maintenance and repairs for several reasons:
Firstly, there is a larger area and a greater amount of equipment, making it easier for contractors to hide additional costs. Secondly, if someone can afford an expensive home, the contractor consciously or subconsciously wants to charge them more for their services.
Overall, it’s an interesting trend that has emerged recently. Services for affluent people have begun to appear, which in terms of functionality are very similar to “for everyone” services but are intended only for the wealthy. And you have to pay accordingly.
The most indicative examples are Myria and Long Story Short . They have created closed marketplaces for selling luxury goods and services, access to which costs $1,000 per month (Long Story Short) or starting from $30,000 per year (Myria). However, Myria also creates a club where users of their service can interact with each other.
Another important trend that today’s HomePoint has formulated is: “You can find a repairman through ads, but we will send you the right one.”
The trick is that HomePoint carries out repairs using third-party contractors, who also advertise themselves “through ads” and are present on various service marketplaces. However, HomePoint itself selects the “best” ones and sends them to perform the necessary work – rather than making homeowners guess which of the contractors on a regular marketplace is the “best.”
This is an example of the trend towards “managed marketplaces” – when there appears to be a marketplace, but it is “hidden” within the service. The service itself selects the most suitable craftsman for the specific task or, as an option, offers the client to choose from the service’s selected, say, three candidates. Afterward, it helps the client control the progress of the work and essentially takes responsibility for the results of the work of the craftsmen recommended by it.
For example, Sweeten operates on such a model, about which I wrote at the beginning of last year. They are also engaged in the repair of houses and apartments and have already raised $20.7 million in investments.
And the last trend, at the forefront of which today’s HomePoint is located, is the emerging transition of the repair industry to a subscription model. Startups like Scription and Pipedreams operate on such a model.
Under this model, equipment owners (and houses, as in the case of HomePoint and Honey Homes) start paying not for repairs, but for their absence 😉 Because the repair company starts providing regular equipment maintenance for a subscription fee to prevent it from breaking down less often.
By the way, it is worth noting that as a result of the implementation of such a model, repair companies become IT services for big data analysis 😉 Because they need to analyze data on equipment failures to choose the optimal schedule and content of preventive maintenance for specific categories and models of equipment.
Such a model is actually beneficial for both equipment owners and repair companies. Because owners encounter breakdowns less often and pay less for more expensive repairs than preventive maintenance. And repair companies receive a constant and stable source of income in the form of a subscription fee.
Where to Go
With the range of possible directions to take after today’s review, the options are plentiful 😉
You could head in the direction of creating analogs of regular services—but exclusively for affluent individuals. You could build a managed marketplace in almost any service sector. Or you could continue to introduce the subscription model into the repair market. Alternatively, you could simply follow the example of today’s HomePoint, which essentially combines all three trends—creating a managed marketplace for the maintenance and repair of luxury apartments and houses, operating on a subscription model.
As we all know, repairs are a major hassle. Choosing repair teams and overseeing their work is too. So, the problem is truly a real-life one. And the managed marketplace model is a way to solve it.
Moreover, focusing on luxury apartments and houses means high bills, allowing for decent revenue while attracting fewer clients. And using a subscription model will ensure the possibility of steady revenue growth.
On one hand, it might seem that repairs aren’t a pure venture. But one thing is for sure—you can make money from it 😉
On the other hand, it seems that the topic of repairs is gradually attracting venture attention. Firstly, through the introduction of managed marketplace models. Secondly, because the transition to a subscription model forces repair companies to become IT companies for big data analysis—without which, an optimal preventive system cannot be built. Venture interest provides the opportunity to attract investments. And with such investments, you can develop much faster, enabling quicker growth and market capture.
And what could be better than both earning and growing at the same time 😉
About the Company
HopePoint
Website: gohomepoint.com
Latest Round: $2M, 25.04.2024
Total Investments: $2M, Rounds: 1