With a lot of us spending more time at home these days, home improvement has continued to be a booming market. Now, one of the big players in that space — ServiceTitan, which builds software that today is used by over 100,000 contractors to manage their work — is getting a little bigger.
The company — which also works with contractors that work on business properties — is acquiring Aspire Software, a software provider specifically for commercial landscapers. Along with that, ServiceTitan is announcing another $200 million in funding, a Series G that values that company at $9.5 billion.
The funding is being led by a new backer, Thoma Bravo, with other unnamed existing investors participating. (That list includes Sequoia, Tiger Global, Dragoneer, T. Rowe Price, Battery Ventures, Bessemer Venture Partners and ICONIQ Capital.)
Los Angeles-based ServiceTitan is not disclosing the financial terms of the deal, but it comes on the heels of the company raising $500 million only in March (when it was valued at $8.3 billion) — money that it earmarked at the time for acquisitions.
ServiceTitan also confirmed that this is its biggest acquisition yet, which roughly puts this deal in the hundreds of millions of dollars. Aspire will stay based in Missouri to build out the company further from there.
Aspire itself has some 50,000 users and sees $4 billion in annualized transactions on its platform across areas like landscaping, snow and ice management, and construction. It has never disclosed a valuation, nor how much money it has raised. The St Louis, MO company was previously backed by growth equity firm Mainsail Partners.
The deal underscores not just how much scale and opportunity remains in building technology to serve the home services space, but also what might be a consolidating trend within that, where a smaller number of companies are building technology for contractors and others in the space working across a number of adjacent and related verticals.
ServiceTitan is already bringing in annual recurring revenues of $250 million — a figure it shared in March and hasn't updated — and as of that month, it had grown 50% over the preceding year. Part of that growth is based on simply more usage of and demand for its software, but part of it also has to do with the company expanding what it covers.
ServiceTitan got its start in residential plumbing, HVAC and electrical — the areas where the the two founders Ara Mahdessian (CEO) and Vahe Kuzoyan (president) went first because they knew them best from their own family businesses — but expanded into areas like garage door, chimney and other areas, as well as commercial property, on its own steam.
In other markets like landscaping or pest control, the expertise is more specialized, however, so it makes sense to make acquisitions in those areas to bring in that software, and teams to manage and build it, to further diversify the company. (ServicePro, a pest control company, was acquired in February.)
ServiceTitan said that its contractor customers have made more than $20 billion in transactions in the last year, but with the wider industry of contracting repair and maintenance services estimated to be worth $1 trillion, there is obviously a lot more potential. Hence expanding the range of areas covered in the industry.
“Both Aspire and ServiceTitan were born out of a desire to improve the lives of contractors who work tirelessly to serve their communities, but who have historically been underserved by technology,” said Mahdessian in a statement. “Mark and his team at Aspire have more than 500 years of combined experience in the commercial landscaping industry. Just like we built ServiceTitan to solve the problems our fathers faced, it’s that first-hand industry knowledge that has enabled Aspire to build the most powerful software in the industry with the highest customer satisfaction.”
Thoma Bravo has been making some prolific moves to take majority positions in a number of older tech companies in recent weeks (see QAD, Proofpoint and Talend for three examples among others). This, however, is a growth investment that is coming as many wonder when and if ServiceTitan might go public.
I'll hopefully get a chance to ask Mahdessian about that later but in March he hinted that an IPO might come later this year or latest by the end of 2022, depending on market conditions. This Series G round implies perhaps stretching to the later part of that timeframe.
“As the fastest-growing software solution for the trades with an unrelenting focus on customer success, ServiceTitan is poised to extend its leadership and capture increased market share as the industry exceeds $1 trillion globally,” said Robert (Tre) Sayle, a partner at Thoma Bravo, in a statement. “ServiceTitan’s expansion into landscaping, a more than $100 billion market in the US alone, is an important step on its path to provide all home and commercial tradesmen with the tools they need to grow and manage a successful business. We are excited to partner with ServiceTitan and to leverage our software and operational expertise to accelerate the company’s growth and build upon its strong momentum.”
There are a number of companies playing in the wider home services market that speak to the opportunity ahead. Companies like Thumbtack are digging deeper into home management, providing a bridge to contractors to fill out the work needed (and also providing them with the software to do so), while companies like Jobber and BigChange, which have also raised recently, are also looking to build better software to manage individual and fleets of contractors and their fleets.
ServiceTitan, the biggest of the software players now, is likely going to continue making more deals to grow its own empire, but it added that it will also be using the funding to expand more organically, with investments into customer service, R&D, and to hire more people across the board.