Ex-plumber’s $100m start-up targets UK
Fergus, a tradie software platform founded by a former Kiwi plumber and named after his pet dog, has battled an increasingly cautious venture capital market to bank $NZ15 million ($13.5 million) in funding led by a major European fund, as it looks to accelerate expansion across the United Kingdom.
The software firm raised funds back in 2017, before taking on further investment from existing investors. This latest round took nine months to close at an increased valuation just shy of $100 million.
David Holmes, CEO of Fergus says it was tough to raise capital, but it is now well set for the next few years. Michael Quelch
The funding round was led by London-based Octopus Ventures, which claims to invest more than £200 million ($350 million) a year, and included investment by Australian venture capital fund EVP, a backer of the 2017 round.
Founder Dan Pollard, who started the company after seeing the problems caused by insufficiently sophisticated tech options for running his plumbing business, brought in Sydney-based digital industry stalwart David Holmes as chief executive in 2019, and the company has been growing at about 40 per cent a year.
“Dan Pollard and I get along really well. He’s still involved as founder and spokesperson and brings great value as the voice of the tradie in everything we do,” Mr Holmes said.
“We are doubling our product investment and rolling out further education and training resources in our core markets New Zealand, Australia and the UK.
“The UK is a huge market for us and is way behind in terms of adoption of JMS [job management software], so we are growing fastest in this market after starting back there in August 2021.”
Fergus is a cloud-based job management platform that lets tradies such as plumbers, electricians and roofers manage quoting, worker timesheets, invoicing and workforce tracking, linking with accounting software like Xero and MYOB.
It has 75 employees, 50 of whom are in New Zealand, with its nascent UK operations based in Manchester.
Mr Holmes said the company was able to deliberately slow its growth rate and become profitable during the COVID-19 lockdowns, but was back in expansion mode, despite the increasing sense of caution in global tech investment markets.
Fergus was advised by Silicon Valley-based investment bank GrowthPoint Technology Partners on its capital raise process, which kicked off last September.
“It was the hardest capital raise of my career. The US is very cautious about businesses not trading 90 per cent in the US, so that was a barrier to us given our current customer composition,” Mr Holmes said.
“Octopus was a great partner to run through negotiations with and showed the greatest understanding of our industry and what we are trying to achieve. We were lucky to be able to select the right partner, but we appointed an adviser in San Francisco who talked to a lot of VCs and investors before Octopus came out on top.”
He said the funding round would give Fergus at least two years of runway to continue its strategy, without having to think about raising again in a tougher market. However, he said the company could reorganise its operations to begin operating more conservatively and profitably within four weeks, if it had to.
Octopus Ventures investment manager Rich Bolton said the potential for global growth was apparent in Fergus, which he said had targeted a niche in the market that had not been attacked by other software firms.
“Fergus is a brilliant example of a team that is digitising a long overlooked sector, with transformative results for its customers,” he said.
“Their army of fans is growing fast and we think the opportunity to transform the trade sector around the world is boundless.”
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