The other shoe has dropped on CareGuideâs 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 CareGuideâs 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 donât usually get capital on those terms.”
– John Philip Green, CareGuide CED
âNone of the other coverage that weâve had really connected it with the fundraising that weâve done,â Green told BetaKit. “We were able to raise the money from RBC, for instance, because of this move. Startups donât 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. âThey wouldnât have given us the money to acquire a company that was losing money,â Green said.
Itâs rare for early-stage startups to make acquisitions beyond those of smaller teams for talent, reinforcing both CareGuideâs 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 Greenâs radar for far longer, however.
âMy wife and I used CanadianNanny before we started CareGuide,â 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.”
“Thereâs no one in Canada that can understand this market better than her.â
âWhen we launched CareGuide, we didnât get significant traction in Canada,â 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 weâve come full circle.”
Again, itâs rare for a Canadian startup to explode into an international market and have to navigate its way back into Canada, but itâs 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.
âIâm just amazed at how well she understands the customer. Thereâs no one in Canada that can understand this market better than her,â Green said, before referencing CareGuideâs now infamous decision to forego customer service in the companyâs early days. “Kind of like a heart transplant, weâre 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 âif the price is right,â but cautioned against shopping sprees at the expense of organic growth. When asked whether or not CareGuideâs unorthodox approach could work in foreign markets where the social and cultural expectations for care can vary significantly, Green responded with typical humility.
âI guess weâre going to find out.”