Handy co-founders Oisin Hanrahan, CEO, and Umang Dua, COO, have had to survive growing pains associated with painful decisions to downsize personnel replaced by chatbots and to power through difficulties with an online system expected to reduce recruiting and on boarding costs. These challenges came as part of an effort to prove the company’s viability to venture capitalists in a changing landscape.
Venture capital opportunities for startups have changed dramatically in the past 18 months. Now, in order to get cash, new companies must not only show exponential growth, but must also show a clearly delineated path to profitability in short time spans.
Handy previously raised $110 million in funding and swallowed up two competitors. A recent market correction caused an overall 29 percent decrease in available venture capital in 2016. This significantly reduced the number of unicorns, or cash-rich startups, and made competition for venture capital fierce for companies like Handy, which has a significant national presence and growing customer base, despite rocky customer ratings.
The burst bubble of the last year is not a nuclear event but a reset that brought a desire for profit back into the startup world. The unpleasant side effects brought cost cuts and layoffs as part of the discipline required to gain the elusive positive margin that broadcasts a turning point for maturing startups.
Handy’s outlook is improving every quarter. Organic growth through repeat business and referrals accounts for half of its growth. This means the cost to obtain new clients dropped 33 percent to $20, and discounted bookings dropped in half to 7 percent. Geographically, Handy.com is now experiencing positive margins in all cities. This is in comparison to just 72 percent in 2015.
The cash burn of $1.5 million per month from six months ago is down 15 percent. Most importantly, Handy expects to step over the threshold into profitability by the end of 2017. This includes launching into new cities and expanding the brand to include a delivery and assembly service.