Odd-jobs marketplace Airtasker (ASX: ART) has made a bold call to acquire a US company that was on the brink of shuttering its services in April, after seeing promise in its repeat business functions, the vision of its founder, and its growing presence in a potentially lucrative market.
Within two months of listing on the ASX, Airtasker will now raise $20.7 million in tandem with a $3.4 million acquisition of curated local services marketplace Zaarly, which has the majority of its users in Kansas City but also has a presence in Dallas-Fort Worth, New York City, Denver, San Francisco and many other US cities.
The raise at $1 per ART share - available to institutional, professional and sophisticated investors - represents a 7.4 per cent premium to the last traded price, athough it's still a significant step up from its prospectus listing price of $0.65 per share in March.
Aside from paying for the acquisition itself, the funds will go towards expanding into more cities in the US, as well as in the UK where Airtasker first launched in FY18.
Zaarly's founder and CEO Bo Fishback will lead the US expansion, building on the company's 597,000 registered users and more than 900 verified service providers.
The target company has gone through several changes since it was founded by Fishback a decade ago when it raised $15 million from blue chip investors including KPCB. The initial model was a "horizontal" marketplace more akin to what Airtasker offers, but in 2013 it pivoted to a curated marketplace model with manual handling and vetting.
The change of strategy had its merits in that it focused on high life-time value and share of wallet with repeat purchase functions, but the company struggled to take off, as evidenced by the significant loss on the 2011 capital raise compared to Airtasker's acquisition.
"Whilst the pivot to a curated marketplace enabled Zaarly to generate a loyal base of repeat customers in Kansas City, it was unable to scale and the team made plans to shutter the service in April," Airtasker said in a presentation released to the ASX this morning.
"Airtasker has acquired Zaarly and plans to migrate all liquidity to our open, almost infinitely horizontal marketplace and invest into the Zaarly team to rapidly accelerate our US expansion plans."
This marketplace liquidity refers to Zaarly's established base of customers and service providers, while Airtasker is also drawn to Zaarly due to its re-booking functionality that is expected to be fully integrated into its own operations by the end of the September quarter.
"Re-booking functionality has the potential to unlock significant GMV (Gross Merchandise Value) opportunity in all markets and increase the potential of Airtasker Listings," the company said.
The Zaarly team is expected to be onboarded to Airtasker by the end of June, while between July and September there are plans to leverage Zaarly's existing user base outside of its leading markets of Kansas City and Dallas, and also to launch an additional city-level market.
Airtasker plans to have its marketing channels scaled and delivering a positive return on investment from Zaarly by the end of the June quarter next year - a deadline by which it also intends to have launched in four or five new city markets in the US.
The placement is expected to settle on 27 May 2021 and the shares issued under the placement will be issued without a disclosure document on 28 May 2021.
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