Redbeacon, a startup focused on helping consumers find local service providers, just raised $7.4 million in Series A funding from Mayfield and Venrock. Mayfield VC Raj Kapoor and Venrock VC Brian Ascher will go on the Redbeacon board as part of the invesment.
Redbeacon, which launched in 2008, has been an active member of the Vator community, attracting more than 1,000 followers in the high-tech entrepreneur community and becoming among the top vote-getters at Vator Splash February (Vator's quarterly event for startups). See Redbeacon CEO and cofounder Ethan Anderson's recent company update Redbeacon profile on Vator.
The company plans to spend its new capital on expanding into different locations and hiring. Specifically, they're looking for software engineers, UI designers and marketing people.
So, how is Redbeacon different from other sites that help consumers find local service providrers? Beyond Yelp, and certainly the phonebook, Redbeacon allows a consumer to get price quotes and book a servcie right on the Redbeacon platform. This is a service also provided by Thumbtack, which also raised some funding recently.
The difference between other providers and Redbeacon is that Redbeacon is focused on getting a lot of information from the consumer, said Ethan. Basically, Redbeacon acts like a concierge. "We're a decision engine for consumers," said Ethan. "We're focused on helping the consumer finding the best service rather than be a directory."
The way it works is a consumer requests, say a painter, in a specific location. They also provide Redbeacon with details, like what kind of painting job is needed. Redbeacon then looks for service providers in the area and sends out a bid form to them, asking the providers to come back with bids for that specific job. Redbeacon also looks at a number of factors, including ratings on the Better Business Bureau, which of a consumer's friends have used the particular service as well which providers are getting high ratings on Yelp.
Redbeacon gets paid only when a job is booked. It receives 10% of the job. So, if a paint job is $1000. Redbeacon receives $100.
While transactions are minimal, the conversion rates are improving. The percent of jobs getting at least one price quote from local services for our top verticals (maids, handymen, plumbers, electricians, trainers, massage therapists) is 100%, said Ethan.
Currently, Redbeacon has 4,000 service providers registered in the Bay Area. They're focusing on partnering with sites, such as BT (British Telecom), to bring in the service providers.
Redbeacon is an interesting case study. Before raising $7.4 million, the company had raised $150,000 from the founders. Each founder invested $50,000 each. They then went on to win a number of startup competitions. All told, they've won more than $200,000 in services and $75,000 in cash prizes. As Ethan puts it: "If you win significant competitions, then you can actually fund yourself and defray costs."
Here's a recent interview I did with Ethan this spring: