CareGuide has closed a $6 million Series A round as the company looks to ramp up sales and marketing efforts for its portfolio of marketplaces.
iNovia Capital and Plaza Ventures led the round, with participation from Conconi Growth Partners, new Halifax-based VC firm Metric, and US firms Structure Capital and FJ Labs. Follow-on investors from CareGuide’s small army of angels include: Alex Conconi, Alkarim Nasser, Bernie Li, Corby Fine, Dave Johnson, David Hamilton, Hasham Aboulhosn, Jacob Shea, Jillian Manus, Jim Murphy, Mike Walsh, Taylor Little, Rahul Parmar, and Tom Predovic. iNovia’s Sarah Marion will be joining the board of directors as part of iNovia’s investment.
“I’m consistently impressed by the management team’s ability to execute and drive growth, while maintaining unparalleled compassion and respect for their customers,” said Marion. “John is Chief Executive Dad and his wife is also a CEO – they’ve felt the pain point first hand and he brings their personal experiences to the business.”
Notably, Structure Capital and FJ Labs have a particular focus on marketplace startups, with Wag and letgo among their portfolio investments, respectively (the latter also has a stake in Alibaba and Uber). FJ Labs’s co-founder Fabrice Grinda also co-founded OLX, one of the largest free classifieds sites in the world.
“There’s a nice diversity of experiences between these VCs, and Plaza has a history of M&A experience, and they’ve even been involved in IPOs in the Canadian market. So it’s not something on our immediate plans, but to have some people with that experience—that’s new to the team, no one else in our investor group has that specific experience,” said CED John Philip Green. “You build the investment team, and get the expertise there before you need it.”
In addition to the funding, CareGuide also announced the acquisition of Omaha-based Nannies4Hire, a 25-year-old company that was previously a leading care marketplace, but had struggled as more competitors entered the market. CareGuide has merged the site with one of its other care properties, Nanny Lane.
“[It] still has a lot of residual value, it still has a lot of monthly users, a revenue stream that was attractive to us, and SEO juice as they say, having been around for 25 years. So it was an attractive asset to us,” said Green.
Founded in 2013, CareGuide has taken an aggressive approach to acquisitions as fuel for growth. The $1 million in debt financing the company took from RBC in 2015 went towards acquiring 13-year-old market leader CanadianNanny. Since then, CareGuide has grown that property’s top-line revenue threefold.
In 2017, it acquired five companies, the same year it saw an injection of capital from Silicon Valley Bank. The plan is simple: acquire an asset and its user base, leverage the network effects of CareGuide’s vast array of properties and centralized tech, and increase revenue like it has with CanadianNanny (CareGuide has an ‘acquisitions’ tab on its website for companies looking to get acquired).
Since acquiring 13-year-old market leader CanadianNanny, CareGuide has grown that property’s top-line revenue threefold.
“We provide liquidity to these entrepreneurs that have often been at it [for several years],” said Green. “Another way of saying this is that we’re becoming good at developing proprietary deal flow, so it’s not the case that these entrepreneurs are hiring an investment bank and then shopping it around and we’re bidding against other potential acquisitors. We’re getting into a grassroots thing where we understand the market, and we’re building relationships with the people that run all of the businesses in our space.”
Across its 26 properties, CareGuide saw 3 million users last month, with more revenue coming from the US market. The hope is that an increase in marketing spend will jump those numbers across the board. That won’t mean CareGuide ads during the Super Bowl, however, or even CareGuide specific ads at all. The company’s VP of Marketing, Alyssa Atkins, told BetaKit that CareGuide will use the money to raise the profile of individual properties in care verticals like nannies, elder care, and pet sitters, while working cross-pollinate marketing opportunities between them.
“You can imagine how someone who is a housekeeper could also be capable of petsitting or housesitting, so even though there’s a transactional nature to some of their interactions on our site, even if they’re not looking for that type of job, they may be looking for one of the other services,” she said.
Besides sales and marketing for its care verticals, the fresh funding will go towards acquisitions and research and development in CareGuide’s technology. Without getting into specifics, Green implied that the company is evaluating acquisition targets that could be significantly bigger than Nannies4Hire—possibly some almost as big CareGuide.
“We just have to look bigger,” he said.