Becoming a landlord means taking on a lot of extra responsibility, including the struggle of finding contractors to handle maintenance and repairs of your rental property.
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Many owners turn to property management companies, who also struggle with finding good contractors in a timely and cost-efficient manner.
In recent years, a number of companies have emerged trying to address this problem in a variety of ways: Angie’s List and Thumbtack being prime examples. And now, one such company, IFM Restoration has raised a $10 million Series A to match skilled tradespeople with available work in their area.
The Dallas-based startup launched in July 2016 as a tech-enabled service provider and is now in the process of evolving into an online marketplace that connects contractors with owners and property managers of rental properties. (IFM stands for Integrity First Maintenance).
The company draws from a nationwide network of independent contractors, leveraging a variety of sources to attract top-quality workers. Its machine-learning-driven advanced matching capabilities aim to provide the skilled workers with a steady stream of jobs.
Austin-based S3 Ventures and San Francisco-based Brick & Mortar Ventures co-led the round, which marked the startup’s first institutional funding. IFM Restoration previously raised $1 million in seed capital.
S3 Ventures Partner Charlie Plauche said that by cutting out the middle man, IFM’s platform “can deliver a superior experience for the renter at a lower cost to the owner while the contractor makes more money too.”
IFM Restoration CEO Dustin Marx co-founded the company with Daniel Feldman after working as an independent contractor to pay his way through college. The pair were consulting for a small mom and pop contractor when they realized how difficult it was to find quality skilled trade people.
The company is mostly focused on the single-family rental market, and recently evolved into multi-family. On one side, it services the property management company, which it charges for the desired repair or maintenance work. The company then matches that work with a skilled contractor on its platform. Its revenue comes from whatever money is left after paying the contractor, any suppliers and for materials.
IFM’s platform does things like automate response times, and gives people the ability to self-schedule appointments for a time that is convenient for them. For the property manager, it’s one less thing to worry about. Plus, IFM says having happy renters often leads to greater retention, which saves them time and money in the long run by reducing turnover costs.
IFM, according to Marx, is different from other companies in the space in that contractors are often asked to buy leads and sometimes are not even awarded work.
“What we’ve done, after a stringent vetting process that includes background checks, is ensure that if a contractor gets matched on a job and is willing to do it at a certain price point, the job is theirs,” Marx told Crunchbase News.
Since so many contractors have cash flow restraints, the security is comforting, according to Marx. Also, IFM takes care of all the scheduling, invoicing, warranties and other back office elements for them so they also have less headache in the process.
“The average contractor on our platform makes over $1,000 a week, and some make as much as $250,000 a year,” Marx said.
IFM Restoration’s revenue in December was up 73 percent year over year, according to Marx. The company plans to double its employee count of 67 by year’s end. Since home repairs and maintenance are considered essential services during the coronavirus pandemic, Marx doesn’t anticipate a slowdown in business.
“People still need things like water to their homes and electricity,” he said. The company has procured masks for all of its contractors. If one tests positive or is asked to quarantine, IFM Restoration will pay them for up to 14 days. It also attempts to screen residents before sending workers out.
“There’s a lot of fear on both sides,” Marx acknowledges.
The company also plans to use the fresh capital to boost its machine and learning and artificial intelligence so that it can better pinpoint the root cause of any service call so that the appropriate type of contractor is sent out.
Currently, the company has 270 contractors active on its platform in eight states and 15 markets such as all the major cities in Texas, Tampa, Orlando, Phoenix and Nashville.
For Darren Bechtel, founder and managing director of Brick & Mortar Ventures, IFM Restoration has been able to develop a one-stop shop for tech-enabled services.
He likes that the company is focused on specific niches: the single-family or multi-family rental market, rather than trying to also service the commercial and industrial sectors or do too much at once.
Bechtel also believes that IFM Restoration has a lot of opportunity to scale even just within its existing customer base in addition to adding new customers.
“They also have the opportunity to build out their core platform and technology and consider expanding into complementary vehicles if and when it makes sense,” he told Crunchbase News.
Bechtel agrees that demand should not diminish in the wake of this pandemic.
“You can’t expect people to shelter in home, and work from home if that home isn’t functional,” he said. “Some things, like home improvement, are elective. But maintenance and repairs are not. These are essential services that still need to be provided.”
Bechtel also points to the company as another example of why Brick & Mortar Ventures “very actively” looks outside of Silicon Valley for investment opportunities.
“We have a business that was basically bootstrapped until now, and these guys have been able to grow a meaningful, high margin services business in a very challenging, fragmented area,” he said.
We’ve written plenty about startups focused on improving efficiencies and processes within the construction industry raising money, but they have mostly focused on larger projects. More recently, though, we also covered Homebound, which essentially serves as a tech-enabled general contractor. That startup has developed tools to track and manage 370 unique tasks associated with building a home, and recently raised $35 million in a round led by Fifth Wall Ventures.
We also wrote about Made Renovation, which manages bathroom remodeling projects on behalf of homeowners. The startup in February raised $9 million in a seed round led by Base10 Partners, Felicis Ventures, Founders Fund and some angel investors also participated in the financing.
Illustration: Li-Anne Dias