RecomN, a platform that helps Malaysian and Indonesian users find service providers for important projects, will enter new Southeast Asian markets after raising $1 million in seed funding from Gobi Partners. The company was launched in July 2014 and inspired by expensive mishaps experienced by two of its co-founders, Alex Tan and Jes Min Lua.
In Tan’s case, he picked a plumbing service based on the “biggest and most professional ad” he saw in the classifieds section. The plumber scammed Tan by disabling his water heater and didn’t reconnect it properly even after Tan coughed up a “house call fee.” Lua, meanwhile, hired a videographer who had good online reviews, but he lost all the footage shot at her wedding.
Those experiences made them realize that there is often a large gap between what service professionals (and online testimonials) say they can do and how they actually perform. Since many important projects, like wedding photos and major home renovations, are things people only need to do once or twice, they have to rely on providers they have probably never met before. In Malaysia, Tan says, the best way to find a provider is through word-of-mouth recommendations from family and friends, but that only works if you know someone who knows someone.
Before this round, RecomN was bootstrapped (Lua and Tan say they wanted to prove the business was sustainable in Malaysia before seeking funds). It will use its new capital to launch in two new Southeast Asian countries this year, but its founders are keeping silent on which ones until they finalize plans. The startup already claims to be one of the top service provider recommendation platforms in Malaysia and the biggest one in Indonesia.
RecomN has two main competitors, which are also based in Malaysia and also have venture capital backing. ServisHero just raised $2.7 million, while Kaodim scored a $4 million Series A last year. Lua and Tan say RecomN wants to carve out its own niche by focusing on big, costly projects instead of things like routine home repairs or cleaning.
The company currently has two revenue models. The first is a credit subscription service for providers, which they spend when they respond to customer requests. The second is creating profiles for verified businesses that don’t have their own websites and selling sponsored content in RecomN’s digital magazine.
Verifying providers and testimonials
Like other service recommendation platforms, RecomN uses algorithms to match users with providers based on cost, availability, and project details. The startup, however, also uses a time-intensive vetting process. After checking each provider’s credentials, like registration numbers, they call at least three previous customers and interview them about their experiences.
To make sure the references are credible, RecomN’s staff asks detailed questions about the length of projects, planning and execution, and actual costs compared to initial quotes.
“I’m sure people sometimes give us addresses for their cousins. We’ll manage to find that out and will ask for another one,” Lua says. “We go until we get three reviews we are comfortable with.”
The process is working so far. The company claims that the providers it recommends get an average 4.8 star rating on their platform after they finish a project.
RecomN’s goal is to scale up in new countries, however, and it might be difficult to continue the current interview process. The founders hope that as the platform gets more repeat users, they will provide reliable online reviews for different providers. As their review database grows, RecomN’s platform will use data analysis to provide speedier provider matches.
“In the beginning we all have to do things that are slightly less sustainable, but as we go and get more data points, we’ll see if customers have been with us for a while and are more reputable and have written good reviews,” Lua says. “Then maybe we won’t have to personally call them up, because their reviews are credible already.”