In Rush to Local Services, Thumbtack Nabs $12.5M Series B

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tumbtackThe investment dollars keep flowing for companies in the local services space. Two months after scheduling firm Booker nabbed 27.5 million from Bain, Thumbtack, a startup that has built a reverse Craigslist for local services, has raised 12.5 million from Sequoia Capital in a series B round, bringing its total funding to a little over $18 million.

Pitched as an anti-Yelp, the service allows consumers to post requests for a service and have providers respond with estimates. The company works on a pay-per-performance basis, charging service providers whenever they contact a potential client.

A number of startups have rushed toward the local services space recently in hopes of exploiting one of the last white spaces in the consumer web. That includes Uber in transportation; ReachLocal and RedBeacon in home  services; RepairPal in car repair; MyTime in a number of fixed-priced verticals; Booker on the back-end; and powerhouses like Yelp and Angie’s List that touch a number of different industries.

Think of Thumbtack and MyTime as two sides of a similar coin. Whereas MyTime uses scheduling integrations to aggregate fixed-priced services like haircuts and dental cleanings, Thumbtack’s reverse marketplace focuses on variable-priced services like wedding photography or home repair. The model effectively creates a custom marketplace for each project, accommodating the variable nature of  factors like price and availability that are critical to the buying decision.

The reverse marketplace model is nothing new.  Zaarly raised a big series A in late 2011 to build out a similar product, only to close the service and pivot to a more traditional marketplace model earlier this year. But the market for services has evolved rapidly since 2011, says Sander Daniels, the company’s co-founder.

“This type of company is more viable than even two years ago largely because small businesses are starting to come online en masse, and also beginning to be savvy for the first time,” Daniels told Street Fight in an interview. “And only now are they starting to focus on more pay-per-performance services, which has benefited us significantly.”

Marketplaces are hard. It’s a high risk, high return proposition, which only a handful of companies have succeeded in navigating over the past decade. Thumbtack has the capital; the question is whether the market has changed enough.

Steven Jacobs is Street Fight’s deputy editor.