Ergeon’s $40M Series B deck – Nob6

Final week, I wrote about Ergeon, the fence-building startup based by a licensed contractor and the co-founder of Upwork. It employs greater than 350 folks in over 40 nations and raised greater than $53 million to shake up the artwork of constructing fences, creating driveways and extra on its path to “finally constructing total properties.” In a world the place householders want — however typically can’t afford or don’t prioritize — a common contractor even for smaller jobs, Ergeon swoops in, and it’s straightforward to see how there’s an unlimited marketplace for this type of factor.

Amazed how Ergeon had been capable of fly underneath the radar for therefore lengthy, solely to pop up asserting it had raised a powerful amount of cash in a fantastically unsexy market, I requested Jenny He, the corporate’s founder, if I might fairly please, with a time period sheet on high, take a more in-depth have a look at the pitch deck she used to boost the corporate’s $40 million Sequence B. To my pleasure, and your profit, she stated sure — so let’s dive in and discover out what it takes to boost a beefy spherical in right now’s fundraising local weather.

We’re on the lookout for extra distinctive pitch decks to tear down, so if you wish to submit your personal, right here’s how you are able to do that. 

Slides on this deck

Ergeon’s slide deck is dated April 2022 and contained plenty of commercially delicate information — however the firm’s CEO was comfortable to go away all of the slides within the deck. She did take away among the most delicate firm information from among the slides, however I believe there’s nonetheless lots we are able to study from this deck, particularly on the subject of displaying how a growth-stage firm differs from the deck of an earlier-stage firm. 

1. Cowl slide
2. Identify rationalization (ERG + EON)
3. We’ve been obsessive about reworking work — staff slide
4. Reached $XX annualized run fee income — traction abstract slide [with some redactions]
5. Our Method — worth proposition
6. Our Flywheel is Working — market dynamics slide
7. Residential development market is enormously underserved — drawback slide
8. Scalable for the primary time — resolution slide
9. The #1 California outside residence development firm in 2.5 years — success story slide [with some redactions]
10.   Robust localized model — advertising/development slide [with some redactions]
11.   Make XX on first buy web of CAC — unit economics slide [with some redactions]
12.   Enhance revenue to XX per venture — unit economics evolution slide [with some redactions]
13.   $xx million annualized run fee — traction slide [with some redactions]
14.   Launch anyplace remotely — go-to-market slide
15.   We’re on monitor to grow to be the most important nationwide outside residence development firm in 2 years — CAGR and market slide [with some redactions]
16.   Clear path to $10 billion income high line in 5 years — development trajectory slide [with some redactions]

Three issues to like

Ergeon is in a barely unusual trade — my first impulse once I heard about its funding spherical was to disregard it. Proper now, the company’s homepage says “Fence Set up Service” throughout the highest. In a world the place I write about hovercraft, nuclear fusion and bizarre little robots from Amazon, it’s laborious to think about that fence-building rises to a degree of curiosity that is smart.

However ignoring Ergeon can be a really foolish mistake. The staff is extraordinary, they’ve marvelous traction and the corporate has a path to nook a fantastically precious market. From the pitch deck, it’s apparent that the corporate is aware of what it’s doing — and might paint an image of a future the place it’s unthinkable that it wouldn’t be wildly profitable. As an investor, that’s a web page from my favourite hymn ebook.

Group-ing with fierce chance

I’ve stated it earlier than — for instance, Encore didn’t fairly make this fairly work — however should you’re going to open your pitch with the staff, the staff had higher be really distinctive. That’s precisely what’s going on right here. Odysseas Tsatalos constructed Upwork (which IPO’d) and Intacct (purchased by Sage) after which shook up the world of garden care and different residence upkeep issues with ezhome. The corporate didn’t work out, however Tsatalos did rent Jenny He as his operations supervisor — and later she was promoted to CEO of the corporate. Collectively, that tells a particularly compelling story.

He, in flip, has a hell of a background in her personal proper: working ezhome, a Ph.D. from Princeton and various years at McKinsey, plus being a licensed contractor. That’s in the suitable path for a particularly succesful technical co-founder and skilled operator combo. The factor this slide doesn’t present is what He’s like when she pitches. I didn’t have the privilege of listening to her try this, however I did interview her for the Nob6 piece concerning the fundraise just a few weeks in the past. She’s good, fast on her ft and understands the market inside out.

As an investor, I’d wrestle to explain a staff that’s higher suited to tackle an organization — and even on this comparatively easy slide, the founding staff tells crucial components of the story. The narrative attracts a parallel between Upwork’s success and the way Ergeon goes to tackle an enormous market that may be a lot much less served by software program startups. It’s masterfully completed, and in case your staff is anyplace close to nearly as good as He and Tsatalos, take notes.

I additionally like how the corporate used its cowl slide (you possibly can see it as the quilt picture on this story) to foreshadow the “staff” slide. Sticking a pair of founders on the quilt of a Sequence B deck exhibits that the corporate is aware of what it’s received: founders because the moat.

Why this market? Properly, lemme inform ya

Slides 1-6 cowl some vital floor: introduction, staff, traction abstract, worth proposition and a abstract of how {the marketplace} is working. That lays the groundwork for why an investor ought to lean in and listen. I additionally think about plenty of traders would meet this pitch with the identical befuddlement as I did: “Wait. You’re constructing … fences? What am I lacking right here?”

Properly, the seventh slide rams that time residence with gusto and magnificence. It’d be a really unambitious investor certainly that’s keen to disregard a TAM/SAM of $1.5 trillion and $700 billion, respectively. The subsequent row of numbers pulls on quite a lot of different vital strands of this dialog: It’s a really crowded market and not using a clear chief (700,000+ companies), there’s a determined scarcity of expert labor (1 million+ labor scarcity), there are a ton of small unbiased contractors on the market which can be overwhelmed and can’t function effectively, and the trade as an entire spends greater than two-thirds of its time on admin.

This slide is a flippin’ masterpiece of convincing an investor by way of numbers: With no single phrase of voice-over, it tells a very good story, and these numbers ram residence the purpose the founders try to make: that this market is large, fragmented and theirs for the taking.

Straightforward-to-understand resolution

When you’re nonetheless with the founders by the point you make it to Slide 8 of the deck, you’ve discovered that it is a huge, fragmented market. So, what’s the answer? Ergeon has you coated right here, with some very intelligent, distinctive promoting factors. The corporate was based by two pc science Ph.D.s, and when you’ve a strong hammer, the issue begins to appear to be a nail. A SaaS-shaped nail, on this case, served by some guidelines and algorithms that take plenty of the guesswork and hand-waving out of the quoting, set up, customer support and planning of a house enchancment venture. Personally, I discovered the zig-zagging consumer expertise path on the suitable just a little complicated, however as soon as I discovered it went from left to proper and proper to left, it made sense.

The corporate’s declare that constructing fences has by no means been scalable earlier than is a daring one, nevertheless it’s not unreasonable — a software program device that has ambitions of being nationally relevant, together with native ordinances, laws, allowing processes, specs, pricing, materials and employee availability, makes that plausible. It looks like an nearly insurmountable large software program growth problem, and as somebody who has needed to do allowing for small tasks every now and then, I can solely begin to think about the multivariable nightmare Ergeon has to deal with. And — whilst I’m imagining that nightmare — I can see how this device, and the dataset that powers it, turns into an enormous and highly effective moat; as soon as Ergeon has a adequate grasp in the marketplace, finds the contracting companions it likes to work with, and spools up the phrase of mouth flywheel, good luck catching up with them.

What this slide tells me is that the corporate is tapping into the highly effective community impact of, er, network effects; the extra jobs it completes, the higher the citation device turns into as a result of it may well make extra correct and sooner quotes, changing large quantities of handbook labor that the carpenters don’t actually wish to be doing within the first place. It leaves the employees to do what they do finest (construct fences), taking the two-thirds of admin work they don’t actually wish to do and turning it into features of a software program platform.

As an investor, it turns into crystal clear what the startup is making an attempt to do right here.

Trac-to-the-tion

It will be very, very tempting to speak about traction within the “what the corporate did nicely” part right here, however I’m not going to. The traction story the corporate is telling is really unbelievable — it suggests it went from nothing to the primary ranked outside residence development firm.

On Slide 9, it claims that it’s already twice as large as its largest native competitor and that it caught up with Residence Depot in simply two years. It additionally reminds us that Residence Depot’s market cap is $300 billion — bigger than Airbnb, Uber and Doordash mixed. The corporate, by way of its market sizing and unbelievable development trajectory, is portray an exceptional image. Sadly, the numbers themselves are redacted — understandably so. You may see how the corporate is rising exponentially, nevertheless it’s laborious to inform precisely how a lot.

While you have a look at the complete pitch deck, although, even with redacted numbers, you’ll get one other masterclass — in the right way to inform a narrative of traction in a approach that makes Ergeon appear utterly unbeatable. It’s superbly completed and nicely value trying out.

In the remainder of this teardown, we’ll check out three issues Ergeon might have improved or completed in another way, together with its full pitch deck!