Thumbtack, a local-services marketplace, at 12 years of age, is considered an old-timer when it comes to gig-economy companies. And that's part of the reason it's working its way down the funding alphabet and is now on a Series I funding. COVID-19 -- along with Qatar Investment Authority (QIA) which led the latest funding round -- have given this company the boost it needs to accelerate growth.
Thumbtack raises $275 million
Thumbtack is a unicorn, valued at $3.2 billion. In its latest funding round, a Series I, Thumbtack raised $275 million. QIA led the investing round, and other participants include Blackstone Alternative Asset Management (BAAM) and G Squared. Past investors include Baillie Gifford, CapitalG, Founders Circle Capital, Sequoia Capital, and Tiger Global Management.
Thumbtack plans to use the money from this latest funding round to build out a home- management business in addition to its local services marketplace of home-service professionals, such as handymen, plumbers, electricians, painters, contractors, and landscapers. It recently acquired home-management startup Setter to help realize its goals.
CEO and co-founder Marco Zappacosta is a second-generation Silicon Valley startup entrepreneur. His parents, Italian engineers who moved to California, co-founded Logitech, an early technology startup. Zappacosta hopes that homeowners will think of Thumbtack as the platform to use when they need maintenance and repairs for their home. By entering the home-management arena, Thumbtack's goal is to offer a subscription service, similar to a video-on-demand service or Amazon Prime.
Are investors the only ones who like Thumbtack?
Thumbtack has had troubles. The prior funding round of $150 million, which occurred in 2019, gave Thumbtack a valuation of $1.7 billion, up from $1.3 billion in 2015. Investors were hoping for the best.
Although ConsumerAffairs gives Thumbtack 3.4 stars out of 5, all the most recent reviews going back two years have been bad, mainly from professionals but some from customers too. The exception is a 2020 5-star review from a customer who randomly keeps popping up amid the new reviews.
On a personal note, I've used Thumbtack as a customer and had a good experience, as have most of the customers who've reviewed Thumbtack on Trustpilot. But all the recent 1-star reviews from professionals on ConsumerAffairs raise a red flag with the business model. The beef is professionals are charged a lot of money per lead even if they never make contact with that lead. Many professionals are spending more money on leads than they're making with Thumbtack.
The Millionacres bottom line
Thumbtack operates in every county in the United States, giving it an edge over other startups in this field, like Super, which are in limited markets. It's growing, as most home improvement businesses did during COVID-19 as people started to take care of their homes since they were stuck inside of them much of the time.
As people return to a more normal life, spending less time at home, and with Thumbtack's many disgruntled contractors, it will be interesting to see how this company fares.