Growth mode: Austin renter services startup Spruce has big expansion plans
Ben Johnson was living in a Houston apartment when he noticed that more than a dozen dog walkers were coming to his complex every day. He thought that choosing one dog-walking service would give apartment supervisors fewer people to vet and possibly create cost savings for residents by increasing efficiency.
But Johnson couldn't get neighbors to agree on a dog-walking service. So in 2016, he created Spruce, a company that provides apartment dwellers with on-demand pet care, housekeeping, laundry service, dry cleaning and more from approved contractors.
Today, Spruce operates a platform that lets people book services through a mobile app. Services are provided by certified, insured and background-checked professionals, according to the company.
The company, which relocated its headquarters from Houston to Austin in 2019, has big expansion plans as it breaks in a new CEO, and recently raised $26 million from investors.
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Spruce currently services more than 2,300 apartment communities — about 600,000 units — in several markets nationwide. The company most recently expanded to Minneapolis and St. Paul in Minnesota, as well as Jacksonville, Fla. The company also recently started offering services to short-term rental owners listed on Migo, a home-sharing service created by RealPage in partnership with Airbnb.
Taking the helm as CEO is technology executive Steven Pho, who has been a director on the Spruce board for two years. Pho has held leadership positions at Austin-based companies including on-demand delivery startup Favor Delivery and digital discounts company RetailMeNot, which went public time during his tenure as a vice president of business development.
Johnson will become the company's president.
“Over the past six years, Spruce has helped to transform both the multifamily and the housekeeping industries and has experienced phenomenal growth in the process,” Johnson said. “I am incredibly excited to work with Steven through our next phase of growth as we accelerate our pace with this new funding.”
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When COVID hit, Spruce shifted gears. In April 2020, the company added a line of sanitation and disinfection services to help fight the spread of COVID-19. The services included disinfecting common areas such as leasing offices and common areas like hallways, elevators, mail rooms and courtyards.
Now, with a new $26 million investment, the company is pushing forward, with plans to double its 80-person workforce, 60% of which is based in Austin. The company let go of its East Austin headquarters amid the pandemic, but is considering leasing new space to have a meeting place for employees to gather, Pho said.
"I'm excited to jump in and help provide strategic leadership and direction and helping us scale," Pho said. "Developing great technology — that's where a lot of the investment is really going into."
In addition to expanding its engineering team, the company will be investing in marketing as it builds out its short-term rental housekeeping services.
Pho acknowledges that Spruce faces plenty of competition in both apartment and short-term rental markets, but said the company aims to set itself apart by partnering with local service providers and creating efficiency in operations.
"A lot of folks that compete with us are very regional in nature. It's mom and pop operations that focus on narrow parts of their market," he said. "Our objective is to make our home service providers a lot more efficient by optimizing their time. Think about idle time and travel from one building to another. We work on creating more routing and scheduling efficiencies, which helps them make more money."
As the company grows, Pho said he looks forward to becoming a player in Austin's rapidly expanding technology and startup sectors.
"I think we encapsulate a lot of momentum. This is a great milestone for the company and for the team, and we're all just super excited being part of the growing tech ecosystem in Austin," he said. "The city has such strong fast-growing tech companies and we love to be part of that."
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Spruce's investment comes as the flow of venture capital to startup is slowing. According to analytics firm CB Insights, VC-backed startups raised far fewer rounds of funding in the past three months than they did late last year and early this year.
Deal activity worldwide dropped 23% between the first quarter and second quarter of this year, CB Insights said. The total funding going to startups for the second quarter to date dropped 27% compared to the first quarter.
"People are really pulling back," David Steakley of Texas HALO fund told the Statesman.
Steakley, who is an investor in other Austin companies, including motorcycle rental platform Riders Share, said: "It's going to be a harsh winter for a lot of companies. If you needed to raise funds now and you don't have it lined up, you are in danger. People are pulling back term sheets. People are getting pretty nervous about an impending recession."
This article originally appeared on Austin American-Statesman: Austin renter services startup, Spruce, shifts into growth mode
