This article is part of Wellesley Hills Financial’s Market Movements series, found in our weekly newsletter.
ServiceTitan, a cloud-based business management solution provider for contractors within home and commercial services industry, closed its Series G financing round this past Wednesday. The company raised $200 million in concert with an announcement that it had reached a definitive agreement to acquire Aspire Software (Aspire). The planned acquisition of Aspire marks ServiceTitan’s largest acquisition to date and exhibits a continuation of the company’s horizontal integration strategy, as venture capital money continues to pour into the firm.
Similar to ServiceTitan’s acquisition of ServicePro earlier in 2021, Aspire’s existing client base of landscaping and construction contractors fits neatly within ServiceTitan’s existing portfolio of customers, positioning the transaction as an easily identifiable grab for horizontal market share in the larger field services space. The acquisition of Aspire will add 50,000 new contractors onto ServiceTitan’s platform, bringing its total clientele north of 150,000 users.
Founded in 2012, ServiceTitan’s platform was initially designed to service the residential plumbing, HVAC, and electrical sectors – areas that the two founders, Ara Mahdessian and Vahe Kuzoyan, knew intimately from their family businesses. From the initial target market, ServiceTitan intuitively expanded into other areas of home and commercial services; however, certain areas of the home services market, such as landscaping and pest control, remained elusive because of the specialized knowledge required to provide effective and ‘sticky’ software solutions for these types of businesses. The acquisition of Aspire and ServicePro allowed ServiceTitan to acquire the specialized technology, technical knowledge, human capital, and customer bases necessary to obtain an effective presence in both of these spaces.
Fueled by a boom within the home improvements market and a flood of new capital, ServiceTitan’s valuation has exploded over the past year, climbing from $2.25 billion as of May 2020 to $9.5 billion as of the end of June. Even with the company’s dramatic climb in value, the growth witnessed to date is likely just the tip of the iceberg. In 2020, ServiceTitan disclosed that its clientele processed over $20 billion in transactions – while eleven figures is certainly nothing to scoff at, within the context of the trillion-dollar market up for grabs, there is appreciable room for growth. We will likely see more acquisitions coming from ServiceTitan shortly as it continues to roll up the space with VC money.