Durham startup ServiceTrade lands $85M investment, sets a goal of $100M in revenue
ServiceTrade, a Durham maker of automation software for commercial services businesses, like electricians, plumbers and inspectors, has raised $85 million from investors — a sum it hopes to use as a springboard to reach $100 million in revenue in the coming years.
The round was led by the Baltimore-based growth-equity firm JMI Equity, with previous investors Bull City Venture Partners and the Charlotte growth-equity firm Frontier Growth also participating.
Founded in 2012 by Billy Marshall and Brian Smithwick, ServiceTrade has around 800 customers across the U.S. and Canada, mainly in the HVAC, electrical and fire protection trades.
ServiceTrade’s cloud-based platform helps companies schedule and dispatch technicians efficiently, produce online quotes, and track historical data. The company also offers features to automate accounting and help technicians manage their parts inventory.
The software, Marshall said, has become especially useful during the pandemic, with so many technicians working remotely in the field.
Both Marshall and Smithwick are veterans of the Triangle’s technology scene. Marshall, ServiceTrade’s CEO, previously led a startup called rPath, whose assets were later acquired by SAS, and worked at Red Hat. Smithwick, a graduate of the North Carolina School of Science and Math, was previously the chief technology officer at the Durham company DunnWell.
The new investment comes a little over a year after ServiceTrade raised $49 million from investors, The News & Observer previously reported.
Marshall said he wants to use the money to make his company the dominant software provider in commercial services — similarly to how other startups, like Procore and ServiceTitan, have cobbled together large market shares in the construction and residential services industries respectively.
“I give us even odds relative to anybody else,” Marshall said of ServiceTrade’s chances. “We’ve got as good an advantage as anybody ... to take on the mantle of absolute market leader.”
“I think this is a chance to be one of the flagship software companies in the area,” Smithwick added.
$100 million in revenue?
Most of ServiceTrade’s customers are small businesses, employing around five to eight technicians in the field. Because of their size, Marshall said, software makers have ignored them.
But that means there’s a lot of room to grow, which is one of the reasons JMI was interested in investing in the company.
“We invest in businesses that automate things that don’t seem that exciting,” said David Greenberg, a partner at JMI. “But they are interesting when you’re making making people’s lives easier and making them more money.”
JMI has previously invested in companies such as the software firm ServiceNow, which now has a market capitalization north of $100 billion, and DoubleClick, an online advertising firm bought by Google for $3.1 billion.
Greenberg said it’s the right time for ServiceTrade to act aggressively. He said the company is setting a goal of acquiring 5,000 customers in the next few years.
“And even when we have 5,000 customers that’ll be just 5% of the opportunity as we’ve sized it,” Greenberg said in an interview. “This could be a really big company. They could easily get to $100 million-plus in revenue in not too long.”
ServiceTrade declined to reveal its current revenue numbers or the valuation at which JMI invested.
“But I will say that it’s a premium value for a great company,” Greenberg said. “The market is as premium valued as it’s ever been, and ServiceTrade was a hotly contested property. So, at some level, we’re just feeling fortunate we’re able to partner with them, because they had many handfuls of options.”
One thing that stood out about ServiceTrade, Greenberg said, was that once it landed a customer, it tended to keep them for the long term.
“They are as sticky as it comes for us,” he said. ServiceTrade is in “the mid- to high-90s in annual retention, and I would say that’s even more impressive coming from a business that’s selling to small- and mid-sized companies.”
Jason Caplain, managing partner at Bull City Venture Partners, one of the company’s earliest investors, said the increased interest from investors is a testament to the strength of the ServiceTrade.
“ServiceTrade has become one of the more important software companies in our region,” Caplain said.
Strong hiring plans
The company has around 120 employees. Before the investment, Marshall said the plan was to grow the company to around 160 employees in the next year — an increase that will require a move into a larger office in South Durham. With the new money from JMI, those plans could be revised upward.
“I think, within a couple years, my expectation is they’ll be hiring over 100 people a year,” Greenberg said. “We’re going to need to recruit really good people, and we think Raleigh-Durham is a great place to build a software company.”
Smithwick said he hopes to add new products to ServiceTrade, as the company hires more engineers.
But hiring that aggressively could prove difficult in the current job market, where software engineers are catching premium salaries and receiving multiple offers. The Triangle’s job market is especially competitive, with so many companies moving here and the number of remote jobs multiplying because of the pandemic.
“With Google, with Apple (expanding to the Triangle), it is a dog fight for for talent,” Marshall said.
This story was produced with financial support from a coalition of partners led by Innovate Raleigh as part of an independent journalism fellowship program. The N&O maintains full editorial control of the work. Learn more; go to bit.ly/newsinnovate
This story was originally published December 6, 2021 at 8:00 AM.
