GM. This is Micro Digest, the newsletter that tries to make you sound interesting on your Bumble dates. 

Long-time readers know that I have a thing for "boring" businesses and so far we've covered car washes, laundromats, badminton courts etc. Well, today we will be covering a startup that does just that but with a dash of tech.

Introducing Ergeon - the fence-building startup that recently closed a $53 million Series B funding round.

The Founders

• Founded by Jenny He and Odysseas Tsatalos
• Jenny He
  • Worked at McKinsey for 7 years
  • Previously CEO of ezhome where she met Tsatalos
  • Licensed contractor
• Odysseas Tsatalos
  • Co-founded the now IPO'd Upwork 
  • Co-founded accounting software Intacct, which was acquired by Sage for $850 million
  • Then went on to found ezhome which didn't work out 

The Problem. Why choose this market? 

• The residential construction market is greatly underserved, mainly driven by fragmentation and severe labour shortage
• With a total addressable market of $1.5 trillion (construction) and a serviceable available market of $700 billion (residential construction) and no clear leader, it's difficult to ignore the opportunity
• There's a desperate skilled labour shortage. To be fair, there are a ton of small independent contractors out there but they are overwhelmed and cannot operate efficiently
• We are seeing more tech being implemented into large-scale construction projects with advances in CAD and visualization. Unfortunately, that tech hasn't been implemented in the residential market yet
• And have you tried to hire contractors for home improvement projects? If you have a project that is not that attractive, the results can be of very inconsistent quality. There might be delays, everything runs over budget and frauds 
• Trust me, as someone who does this for a living, the whole process is just too painful

The Solution 

• When you have 2 founders, both with computer science PhD, the play here is obvious - SaaS 
• The idea here is simple - enabling anyone to order construction projects in the same way they order other products and services online
• Ergeon handles all the contact between the contractors and the homeowner. They do everything remotely, from taking measurements to the permitting processes
• And because they're a tech startup, they can get funding and resources much easier than the contractors so by partnering up with them, Ergeon can take the front and back office work off them while at the same time giving them an economy of scale that they wouldn’t otherwise enjoy

If you ask me, I think this business model could definitely work here in Malaysia. Having a small project done properly here is so so tough - getting the right permit and the right contractors while making sure everything is on time and within budget is an absolute nightmare. That's why I think the one who manages to streamline everything online is going to hit a home run. Don't get me wrong, whoever tries to do this is going to face tremendous challenges ahead.

But hey didn't kaodim just go under? Ya but those are marketplaces and mainly on home services. We don't have a one-stop online solution for small-scale construction projects.

Before you go...

• Check out issue #66 where we talked about remote sweaty business 🧹
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