CareGuide continues to break the rules as it gobbles up Canadian competitor

CareGuide

The other shoe has dropped on CareGuide’s recent $1 million debt financing from RBC. At the time, the care marketplace’s Chief Executive Officer Dad, John Philip Green, teased the possibility of a major acquisition to follow, and that possibility became reality earlier this week as it was revealed that CareGuide had acquired Canadian competitor and category-leader, CanadianNanny.

While regular BetaKit readers tracking CareGuide’s recent fundraising activity might have seen the writing on the wall, the move still seemed to catch some by surprise.

“”We were able to raise the money from RBC because of this move. Startups don’t usually get capital on those terms.”
– John Philip Green, CareGuide CED

“None of the other coverage that we’ve had really connected it with the fundraising that we’ve done,” Green told BetaKit. “We were able to raise the money from RBC, for instance, because of this move. Startups don’t usually get capital on those terms.”

But CareGuide did get those terms, in typical CareGuide fashion, by defying startup convention: an early-stage startup acquiring an established, 13-year-old category leader for its revenue and customers. “They wouldn’t have given us the money to acquire a company that was losing money,” Green said.

It’s rare for early-stage startups to make acquisitions beyond those of smaller teams for talent, reinforcing both CareGuide’s unorthodox operational approach, as well as the attention that went into the deal. Green told BetaKit that the company had been in negotiations with CanadianNanny as early as January 2014. The Canadian leader for finding child care has been on Green’s radar for far longer, however.

CanadianNanny

“My wife and I used CanadianNanny before we started CareGuide,” Green explained. “When my son was born five years ago, we hired a nanny through CanadianNanny and had just a fantastic experience with it. And that experience really informed me when creating CareGuide.”

“There’s no one in Canada that can understand this market better than her.”

“When we launched CareGuide, we didn’t get significant traction in Canada,” Green continued. “Our sites took off in the U.S. Up until the acquisition of CanadianNanny, 95 percent of our revenue was in American dollars. So adding CanadianNanny is almost like we’ve come full circle.”

Again, it’s rare for a Canadian startup to explode into an international market and have to navigate its way back into Canada, but it’s just another incongruity typical of CareGuide. Beyond the market and revenue growth, Green explained that the acquisition provided an exciting cultural opportunity for CareGuide. All CanadianNanny staff will be retained in the rollup, including founder Martha Scully, whom Green was quick to praise for creating a customer-first culture within the company.

“I’m just amazed at how well she understands the customer. There’s no one in Canada that can understand this market better than her,” Green said, before referencing CareGuide’s now infamous decision to forego customer service in the company’s early days. “Kind of like a heart transplant, we’re hoping to really embrace that approach and make it one of the pillars of our organization.”

Green was willing to admit that there are more potential acquisitions on the horizon “if the price is right,” but cautioned against shopping sprees at the expense of organic growth. When asked whether or not CareGuide’s unorthodox approach could work in foreign markets where the social and cultural expectations for care can vary significantly, Green responded with typical humility.

“I guess we’re going to find out.”

Douglas Soltys

Douglas Soltys

Douglas Soltys is the Editor-in-Chief of BetaKit and founder of BetaKit Incorporated. He has worked for a few failed companies and written about many more. He spends too much time on the Internet.