Cracking a big, growing and busy market that no one else cracked
This guest blogpost is written by Rasmus Bjerngaard, venture investor in Northcap Partners. Since 2014 Northcap has been investor in the Copenhagen based startup in the local search market Colego. In this blogpost Rasmus Bjerngaard explains what made them believe in Cologo.
You’ve probably been there: How do I know if that lawyer is good? Can anyone recommend a carpenter? I need help planting a tree in my garden — who does that? Every other week you have a task that somebody else could help you with for a fee. But it is cumbersome to find and organize, and often you don’t know what it involves and how to ensure the right quality at a fair price.
On the other side of the equation, companies of all sorts are struggling with finding new customers. They are ready to help you, but are caught in an equally cumbersome challenge of finding the right customers matching their offerings. A lot of their effort goes into marketing which could be better spent on delivering great service. Online marketing is just not a key competence of these small, medium, and even large companies.
The market
This is a well-known pain and something that has been tried solved in many different ways: Yellow Pages, local search (Yelp, Yandex), “Get 3 offers” portals, AdWords etc. In a wider perspective, the challenge is for companies to establish a strong web presence – and for many service providers this very difficult to handle.
In 2013 40% of the population used local search every day and the local search market has been estimated to $10.2 billion in 2016 — a near doubling from $5.7 billion in 2011.
So the market is big, growing, very fragmented and busy. No one has cracked it yet and there are no dominant players. Many small players are doing ok locally, but scaling appears to be a challenge.
A horizontal approach
Having followed the local search and web presence market for some years we were intrigued when we first met the Colego team in 2014. They were executing exceptionally well and within a short time they had managed to build a viable business.
Colego is characterized by its horizontal approach: Across 40+ industries Colego sources tasks that are sold as leads to service providers. The service providers can choose tasks based on descriptions and only pay for the leads they contact. Colego facilitates the process and qualifies the task specifically for each task type and does not seek to replace the professional interaction between service provider and customer — that’s what the professional is good at.
Colego’s value is in facilitating the process and taking out the overhead for both sides of the market. End customers come to Colego to get predictable quality from a professional at a fair price. Professionals use Colego to source qualified customer leads that match their offerings.
On one side, Colego pays for the incoming tasks through a variety of channels, on the other side the tasks are sold as leads (max 3 leads per task). Being specialized in building an online presence, Colego can do this cheaper and better than if a service provider would do it him/herself.
Handling this with a profit across numerous industries, localities and time while ensuring that the promise of delivering quality tasks to the service provider and quality service to the end customer is anything but trivial. Colego delivers this through an advanced automatic qualification process closely integrated with a specialised customer support organization.
The number of tasks successfully fulfilled in Denmark is growing rapidly. And Colego is now looking at international opportunities.
