Oneflare, a startup based in Sydney, Australia, has received a $15 million investment in a new strategic partnership with Fairfax’s Domain Group, making the tradie marketplace a highly competitive “two-horse race”. The funding, which is in exchange for 35% equity, values the startup at over $40 million. The investment follows Oneflare’s major competitor, hipages, partnering with News Corp, a rival of Fairfax, through a $40 million investment in exchange for 25% equity.
Two-Year Effort Pays Off for Oneflare with $15 Million Investment
According to Oneflare founder and CEO Adam Dong, the discussions with Domain have been ongoing for over two years, driven by the logical need for home buyers, sellers, and renters to access services that his company provides. He told StartupSmart that the talks turned toward investment in November 2017. The partnership will entail Oneflare being integrated into Domain’s ‘ownership’ section, going beyond just funding. Dong explains that the investment will facilitate the rapid expansion of various aspects of the business, primarily through product development, hiring, and some marketing. Since its establishment in 2011, Oneflare’s platform has linked users with experts in areas such as painting, cleaning, concreting, and renovating. Dong said the website presently attracts 1.3 million monthly visitors, hosts 80,000 registered businesses, and doubled in size from last year, indicating significant growth.
Competition heats up in tradie marketplace space as two major players emerge
As two major media corporations align with two competing tradie marketplace companies, the competition in the industry is heating up. Oneflare CEO Adam Dong asserts that it has now become a two-way battle, with room for only one or two dominant players in each vertical in Australia. While hipages received a higher valuation in its partnership with News Corp, Dong believes Oneflare has the advantage when it comes to customer reviews, which are crucial for building trust in the platform. He says that customer trust is paramount, and Oneflare is leading the way in this aspect.
Emphasis on Generating Revenue
Demonstrating revenue and clear growth has been crucial to securing a large investment, according to Oneflare founder and CEO Adam Dong. He notes that many startups struggle to show their revenue and growth potential, particularly in the Australian fundraising environment, which is less conducive to startup growth than that of the US.
“Running an Australian-only startup is challenging,” Dong says. “It’s crucial to have a company that can operate lean and generate revenue. The valuation won’t be based on blue-sky prospects ten years from now. Instead, it will be based on revenue, growth rate, and track record.”
Dong believes that this is an important lesson for other local startups seeking funding. He emphasizes that revenue should not be underestimated, as it was the first thing investors asked about when he sought funding for Oneflare. “This significant deal for us would not have been possible without revenue,” Dong says.
