is proof that a lot of technology is necessary to make it easy to find, price, book, schedule and pay for home services like lawn care, pest control or mulch spreading.
The Raleigh startup, a 2014 NC IDEA grant winner
, has spent the last year in stealth mode building out tools to completely revolutionize the way homeowners find and secure home services and vendors find leads, turn them into customers and manage their jobs.
The site launching publicly today lets Triangle area homeowners book, price and schedule services, communicate with vendors and make payments, and vendors manage workflow, customer service, communication, conflict resolution and payment collection.
With local beta tests under its belt and $1 million in new funding from local investors Idea Fund Partners, Cofounders Capital, Sovereign's Capital and angels Chris Evans and Triangle Capital's Brent Burgess, plans are underway to expand to new cities in coming months and to hire at least 10 employees to join a staff of eight full-time and five contractors in an office adjacent Raleigh's Fletcher Park. The startup also hopes to raise another $500,000 to close the round.
Says Hunt Davis, a former investment banker who became the company's CEO in January: "We're in a $500 billion market that everybody and their brother is trying to address (...). We feel the problems inherent in the system are tremendous and to just solve with lead generation, to just give me a directory of vendors really only moves my problem to the Internet. It doesn't fundamentally solve my problem. That's what we do."
Why Pack Purchase
The idea for Pack Purchase came from its president and founder Tyler Graybeal, the owner of a Triangle-based pressure washing and deck staining company. He combined his business experience—he graduated from Wake Forest University with a business degree and worked in finance at AXA Advisors—with his understanding of home services to develop a platform to solve as many problems for contractors as possible while simplifying home care for homeowners.
The two men met on a camping trip in the Adirondack mountains and Davis was immediately taken by Graybeal's idea and invested in an earlier round. Davis spent seven years managing the engineering practice of FMI, a Raleigh-based investment banking firm handling some of the largest mergers & acquisitions in the construction and engineering industries. He's also the son of small business owners in home care—his family owns Stone Brothers & Byrd Garden Center in Durham.
"Between my family business and investment banking, I have a lot of experience and understanding of the industry, coupled by the fact that I'm a homeowner," Davis says. "It was something I was easily able to connect with."
How it works
Davis explains what Pack Purchase has created as a "curated marketplace" or "general contractor" for home services. Rather than dealing with individual home service companies, homeowners visit Pack Purchase to make all their selections. Algorithms built within the platform take public data about the size of lots and homes and combine it with satellite images and instructions from homeowners to price a job in real-time. Pack Purchase can offer better prices over time because they're bringing vendors so much business, Davis says.
On the vendor side, there's a platform for managing, scheduling and assigning jobs, and an app that gives detailed instructions to a contractor on the job. Then, for example, after a mulch job is completed, the app prompts the worker to take a photo of the completed job so Pack Purchase can process payment. The platform handles any customer complaints and concerns on behalf of the contractor.
The startup takes lessons from Uber in that it interfaces with customers but local contractors actually perform the service. It also sets the price for that work, similar to the ride service platform. From Airbnb, it borrows dispute resolution. It takes responsibility for any problems with service, but tries to avoid those by carefully vetting contractors.
That happens through background checks, interviews, validating ratings and reviews and requiring proof of licensing and insurance. Davis won't reveal the number of local contractors on the platform, but says Pack Purchase doesn't require a huge bank of contractors just yet to perform work ordered through the site.
What makes Pack Purchase unique from sites like Thumbtack, Amazon Home Services, Groupon or Angie's List, is that it merges an easy-to-use platform for homeowners with a sophisticated back end for even the smallest of vendors.
"We strip out so much of their cost structure, software licensing fees, customer service, sales and marketing," Davis says. "We enable them to be a much bigger company on the same amount of overhead."
Pack Purchase collects an undisclosed percentage of each sale.
Investor interest came early for the men. After winning the grant last summer, they closed a small round in the fall with Idea Fund Partners, Sovereign's Capital and David Gardner (prior to founding his new fund Cofounders Capital). That enabled the early tests.
Gardner admits he was impressed with the idea from the beginning—he's learned a lot about consumers from his portfolio company, FilterEasy, a monthly delivery service for air filters.
"People today are extremely busy and they really value convenience," he says.
Lister Delgado of Idea Fund Partners says it was one of those ideas he loved the moment he heard the pitch. But the men decided to co-lead the series A after seeing early traction from local homeowners and the ways in which Pack Purchase responded to customer feedback.
Here's an example from Gardner: An early version still required vendors to come out and price jobs, but it was frustrating and inconvenient to schedule. They spent 90 days with a development team finding a way to offer homeowners instant pricing instead, what they believe to be a differentiator for the company today.
"It was ballsy to pull the product off the market and walk away from revenue to do R&D and come back with a different solution," Gardner says. "But that's what you want to see."
The next step will be scaling. A short list of cities are under consideration for expansion. They'll tackle the first this fall. It's always more expensive to add new markets, Delgado says, but the true test for Pack Purchase will be to find a way to scale at a small magnitude of cost.
To do that, Delgado suggests: "We want them to gain more efficiencies, learn more about pricing and improve some technology."
Davis is spending his days answering those questions. He and team are also deciding how to staff a new market, what sort of marketing and sales avenues to pursue, how much of the work can be automated and performed remotely. More announcements are coming soon.
In the meantime, Idea Fund Partners and Cofounders are celebrating the closing of their first deal together.
"We co-led this deal and worked together," Delgado says. "We're going to do a lot more."