About a year ago you could say we reached peak on-demand home cleaning startup, epitomised by the rather sudden closure of Homejoy, which had raised nearly $65 million from a host of Silicon Valley VCs, and the merger of the UK’s Hassle with Rocket Internet’s Helpling.
Since then things have been pretty quiet on the home cleaning front, but that changes today with news that Finland’s Freska has acquired Norway’s Wipe, signalling its intent to lead the space in the Nordics.
Terms of the deal remain undisclosed, though I understand Wipe’s founders are staying on and going forward will run Freska’s operations in Norway. In a call, Freska co-founder and CEO Sebastian Heinrichs declined to comment on any other aspects of the acquisition, including whether or not it was all-stock, cash or a mixture of both.
He did say, however, that this sets up Freska to be the market leader in Nordics, noting that Rocket Internet’s Helpling previously entered Sweden, only to retrench in October, seeing it sell Helpling Sweden to local competitor Tidyapp. At the same time Helpling pulled out of Spain, Brazil, and Canada to focus on U.K., Germany and France as it looks to become profitable.
On that note, Heinrichs is positioning Freska, which I understand recently closed a round of undisclosed funding, as a buyer not a seller, with more consolidation expected amongst a plethora of local players in the on-demand cleaning space.
“Big time consolidation in the cleaning industry will take place in the upcoming years. We see us as buyers rather than sellers,” he says in a statement. “Home cleaning is a growing industry and a industry that will never vanish – it will sure take on different shapes within the next decades, as now when going from offline to online, but the demand for a clean home will always be there”.
I asked Heinrichs what he thought the biggest challenge is for startups, no matter how well-funded, to succeed in the on-demand home cleaning market, and after a long pause for thought he told me it’s managing supply and demand, and keeping both sides happy — something he believes Freska’s technology platform is enabling despite home cleaning being at its heart a people not technology business.
Here not only is on-boarding cleaners key but also ensuring they have enough work to stay motivated and loyal to the platform. Likewise, customers need to trust the service provided and since the service takes place in people’s homes, it’s a very “sensitive” business, says Heinrichs, and one that has to scale carefully and without destroying the original value proposition along the way.
“The problem some players have faced in recent years is due to a lack of understanding the sensitivity of making home cleaning a business – its very simple: home cleaning is a customer retention game and good retention numbers are created mainly through high quality. High quality will impact your scaling abilities, your profitability, everything. The alternative cost of scaling with the cost of loosing quality is too high in this industry.”