Venture capitalists are changing the way that they measure the ongoing success of new startup companies that they invest in. In the past, the focus was on the rapid growth and expansion of these new companies into new territories. But too much expansion can be risky and it can leave a young upstart company in precarious position where it is severely low on cash. Venture capitalists have started looking at a company’s actual profits rather than just its growth rate when considering whether or not to invest additional money. Handy Home Cleaning is feeling the squeeze of its investors demand for a profitable return on their money.
Handy Home Cleaning was founded in 2012 by Oisin Hanrahan, CEO and Umang Dua, COO. Handy Home Cleaning uses the same kind of business model that was made popular by companies like Uber and others. Handy hires independent contractors to do the work. The independent contractors can look for and accept jobs using a mobile app.
Handy Home Cleaning has been mostly focusing on battling for dominance in new market territories. If Handy doesn’t move quickly to conquer a new market place, it runs the risk of a competitor beating it to it and taking over. Handy was pouring massive amounts of money into expansion efforts at the expense of profit.
Venture capitalists have already invested $110 million into Handy and are pressuring Handy to show a larger profit. The investors are threatening to reduce or stop future investments if Handy does not start showing a profit that will help secure their money.
Handy.com changed its business plan to focus on profits to calm down the investors.
Handy has streamlined its hiring procedures by implementing a company wide online hiring process for its contractors which saves millions per year in expenses. More importantly, Handy has focused on increasing its customer base within existing territories rather than on gaining new markets. These steps will allow Handy to show a profit for the investors.