Pitch Deck Teardown: Ergeon’s $40M Sequence B deck

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 international locations and raised greater than $53 million to shake up the artwork of constructing fences, creating driveways and extra on its path to “ultimately constructing complete properties.” In a world the place householders want — however typically can not afford or don’t prioritize — a basic 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 formidable sum of money in a fantastically unsexy market, I requested Jenny He, the corporate’s founder, if I may fairly please, with a time period sheet on prime, take a more in-depth take a look at the pitch deck she used to lift the corporate’s $40 million Sequence B. To my pleasure, and your profit, she mentioned sure — so let’s dive in and discover out what it takes to lift a beefy spherical in as we speak’s fundraising local weather.

We’re in search of extra distinctive pitch decks to tear down, so if you wish to submit your personal, here’s how you can do that. 

Slides on this deck

Ergeon’s slide deck is dated April 2022 and contained a variety of commercially delicate information — however the firm’s CEO was pleased to depart all of the slides within the deck. She did take away a few of the most delicate firm information from a few of the slides, however I feel there’s nonetheless lots we are able to study from this deck, particularly in relation to displaying how a growth-stage firm differs from the deck of an earlier-stage firm. 

1. Cowl slide
2. Title clarification (ERG + EON)
3. We now have been obsessive about remodeling work — staff slide
4. Reached $XX annualized run charge income — traction abstract slide [with some redactions]
5. Our Method — worth proposition
6. Our Flywheel is Working — market dynamics slide
7. Residential building market is significantly underserved — drawback slide
8. Scalable for the primary time — answer slide
9. The #1 California out of doors residence building firm in 2.5 years — success story slide [with some redactions]
10.   Robust localized model — advertising/progress slide [with some redactions]
11.   Make XX on first buy internet of CAC — unit economics slide [with some redactions]
12.   Improve revenue to XX per mission — unit economics evolution slide [with some redactions]
13.   $xx million annualized run charge — traction slide [with some redactions]
14.   Launch anyplace remotely — go-to-market slide
15.   We’re on observe to turn into the most important nationwide out of doors residence building firm in 2 years — CAGR and market slide [with some redactions]
16.   Clear path to $10 billion income prime line in 5 years — progress trajectory slide [with some redactions]

Three issues to like

Ergeon is in a barely unusual trade — my first impulse after 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 weird little robots from Amazon, it’s arduous to think about that fence-building rises to a stage 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 helpful 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 e-book.

Staff-ing with fierce risk

[Slide 3] Let’s discuss this staff … Picture Credit: Ergeon

I’ve mentioned it earlier than — for instance, Encore didn’t quite make this quite work — however should you’re going to open your pitch with the staff, the staff had higher be actually 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 an especially compelling story.

He, in flip, has a hell of a background in her personal proper: operating ezhome, a Ph.D. from Princeton and various years at McKinsey, plus being a licensed contractor. That’s in the correct route for an especially 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 TechCrunch piece in regards to the fundraise a number of weeks in the past. She’s good, fast on her toes and understands the market inside out.

As an investor, I might 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 elements of the story. The narrative attracts a parallel between Upwork’s success and the way Ergeon goes to tackle an enormous market that could be a lot much less served by software program startups. It’s masterfully carried out, 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 may see it as the cover image in this story) to foreshadow the “staff” slide. Sticking a pair of founders on the duvet of a Sequence B deck reveals that the corporate is aware of what it’s acquired: founders because the moat.

Why this market? Properly, lemme inform ya

[Slide 7] The corporate tells the story of the promote it serves in numbers. Picture Credit: Ergeon

Slides 1-6 cowl some necessary 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 concentrate. I additionally think about a variety 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 prepared to disregard a TAM/SAM of $1.5 trillion and $700 billion, respectively. The subsequent row of numbers pulls on a wide range of different necessary strands of this dialog: It’s a really crowded market with out 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 might be overwhelmed and can’t function effectively, and the trade as a complete spends greater than two-thirds of its time on admin.

This slide is a flippin’ masterpiece of convincing an investor by means of numbers: With out a single phrase of voice-over, it tells an awfully good story, and these numbers ram residence the purpose the founders are attempting to make: that this market is large, fragmented and theirs for the taking.

Straightforward-to-understand answer

[Slide 8] Software program, consuming the world, as predicted. Picture Credit: Ergeon

In case you’re nonetheless with the founders by the point you make it to Slide 8 of the deck, you’ve discovered that this can be a huge, fragmented market. So, what’s the answer? Ergeon has you lined right here, with some very intelligent, distinctive promoting factors. The corporate was based by two laptop science Ph.D.s, and when you’ve got a strong hammer, the issue begins to seem like a nail. A SaaS-shaped nail, on this case, served by some guidelines and algorithms that take a variety of the guesswork and hand-waving out of the quoting, set up, customer support and planning of a house enchancment mission. Personally, I discovered the zig-zagging person expertise path on the correct somewhat 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, but it surely’s not unreasonable — a software program software that has ambitions of being nationally relevant, together with native ordinances, rules, allowing processes, specs, pricing, materials and employee availability, makes that plausible. It looks like an nearly insurmountable massive software program growth problem, and as somebody who has needed to do allowing for small tasks sometimes, 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 software, and the dataset that powers it, turns into an enormous and highly effective moat; as soon as Ergeon has a ok grasp available on the market, 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 software turns into as a result of it may make extra correct and sooner quotes, changing large quantities of guide labor that the carpenters don’t actually need to be doing within the first place. It leaves the employees to do what they do greatest (construct fences), taking the two-thirds of admin work they don’t actually need to do and turning it into features of a software program platform.

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

Trac-to-the-tion

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

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

While you take a look at the complete pitch deck, although, even with redacted numbers, you’ll get one other masterclass — in inform a narrative of traction in a method that makes Ergeon appear fully unbeatable. It’s fantastically carried out and effectively price testing.

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