Something happened last week that might be a breakthrough moment in the local, SMB SaaS space that we’ve been covering for some time now. Los Angeles SMB SaaS startup ServiceTitan just took half a billion dollars in private equity money at an $8.3 billion valuation.
This latest round comes from Sequoia Global Equities and Tiger Global Management. Prior to this round, the company had cumulatively taken just under $400 million in both venture capital and private equity capital.
With this round and the $8.3 billion valuations, an IPO this year or next year seems inevitable. But time will tell of course.
What we find most interesting about ServiceTitan is its ability to build a considerable valuation with just 7,500 customers. At an estimated ARR of $250 million, our simple math puts their average revenue per user or ARPU of $33,333/year of almost $2,800 per month.
That is a ton of money in the home services industry. We also learned that ServiceTitan charges as much as$245 per month, per technician. As a point of comparison, we know that HouseCallPro charges just $49 per month for a similar stack. We also know that many players in the SMB SaaS space are charging upwards of $250 to $300 per month, albeit for simpler solutions.
Addressing the Top of the Market
So what do these figures tell us? First, we’ve got to assume that ServiceTitan’s target is the top tier local service provider within the home services sector. Think Roto-Rooter, Rescue Rooter. An operator needs more than a technician or two to be a ServiceTitan prospect.
ServiceTitan’s customers are also leaning into using technology for all aspects of their business operations. According to the company, the 7,500 customers are processing some $20 billion of transactions through the platform.
If Angie and Thumbtack are the places where homeowners go to find services and technicians, then ServiceTitan is where those technicians go to manage and organize their own businesses.
ServiceTitan is based in Glendale, CA. One of its early investors is William Hsu via Mucker Capital. His name should be familiar to those in the local space. At one time, Will lead the product team at AT&T Interactive. Aka YP.com.
Today ServiceTitan has offices in Atlanta, Colombus, and Armenia, in addition to the Glendale HQ. The company clearly has all the cash it needs. At least for the time being.
Growing Up in Home Services
Here is what co-founder and CEO Ara Mahdessian had to say about the latest round.
“Today, as both homeownership rates and time spent at home reach record highs, these essential service providers are facing rising demand from an increasingly tech-savvy homeowner. By providing contractors with the tools they need to deliver a great customer experience and grow their businesses with ease, ServiceTitan is enabling the hardworking men and women of the trades to reach the level of success they deserve.”
Mahdessian grew up in a family of HVAC providers and recognized early on the need for better software and technology to run a growing home services business.
He’s clearly applied that personal knowledge to leading ServiceTitan and driving compelling SaaS KPIs. We’re eager to see how things develop in the coming weeks and months. We are most interested to see how ServiceTitan can find additional local services companies with enough revenue to make ServiceTitan’s considerable SaaS pricing model deliver a compelling ROI.