The startup application had received a lot of funding in 2015 and 2016. The company received will over $50 million in late 2015 from venture capital companies. In total, funding has reached over $110 million. This surge in funding turned this small startup into a big deal with huge expectations.
Most other NYC home cleaning companies in the same market have trouble raising funds while Handy has the opposite problem. Handy has struggled in the beginning of 2016 to appropriately allocate their excess funds into productive parts of the project. The founders also worried that they would be criticized for squandering their abnormally high funding.
Venture capital has been correcting itself recently with funding going down rapidly. Many projects had received disproportionate amounts of funding in accordance to the type of application. This has lead to inappropriate spending habits of new technology startups. Investors are now going back to focusing on ROI rather than throwing money at new ideas and hoping to strike gold.
In 2014, Handy decided to stop geographical expansion of the company and they stuck to 28 cities. They wanted to focus on improving efficiency of the product and discover ways to maximize their ROI before trying to take over the world. They recently reported a profit margin of 72 percent over their monthly investment. Their profits have proven that they are not just another money burning startup. They have reported that they are open to investment but it may not be necessary at this point.
Their decision to focus on quality has paid off. Their staff is very happy and their is a high retention rate of employees. Both the amount of cleaners available on the application and customers are plentiful in the cities that they operate. Customer referrals, which is their primary method of growth, has drastically increased and their cost of obtaining new clients has become cheaper.