LawnGuru hints at the direction Michigan’s economy is taking

That sounds unlikely, even ridiculous, at least to those in the “old” economy: A start-up lawn care service in Ann Arbor just got some venture capital guys to invest $1 million.

But understanding why this investment makes sense will help us see where Michigan’s economy may be headed.

The company is called LawnGuru and offers on-demand lawn care and snow removal service through a smartphone app. The company launched in 2015, initially operating in just 12 ZIP codes in southeast Michigan. It has now expanded to over 200 postcodes, serving some 7,500 users. It hopes to be rolled out to the Atlanta, Chicago, Houston, and Washington, D.C. markets soon.

It has 11 employees, including co-founders Skye Durrant and Brandon Bertrang.

It works like this: many homeowners contract with a local lawn care company to do the mowing, trimming, and snow removal. But some clients don’t like to lock themselves into a contract for a season or a year, or they find it difficult to reach their contractor.

LawnGuru says it makes those relationships easier, faster, and more transparent. Around 150 lawn maintenance contractors can now be reached via the app. Customers can order one-day service, seasonal summer or winter contracts, or a combination. The LawnGuru app handles all billing and communications, much like on-demand ridesharing services Uber and Lyft handle all ordering and billing through their app when customers order a ride.

“We’ve made it really easy for customers to communicate with their supplier,” said co-founder Durrant. “If they want to skip a service, they want to pause a service, that just means opening an app and pressing a few buttons. It creates an environment where they can easily communicate with each other and really get the services they want. need when they need it.

LawnGuru was recognized early on. Durrant and his co-founder Bertrang have won a spot at a premier entrepreneurial boot camp called 500 Startups in Mountain View, California. This training gig came with $125,000 in support. Then last fall, they won the $25,000 prize for best new product in the annual Accelerate Michigan tech startup competition.

The just announced $1 million seed funding round was led by Sierra Wasatch Capital with venture capitalists Canyon Creek Capital, Briggs and Stratton and Sequoia Capital. The investment took the form of loans convertible into equity.

David Brophy, a professor of finance at the University of Michigan’s Ross School of Business and an expert on entrepreneurial startups, said “old economy” types had better get used to new model companies like LawnGuru that disrupt their industries.

“It’s not the business model of tomorrow,” he said. “It’s most likely the business model of the day before yesterday and we’re only seeing it now. I think every business in the world is going to face something like this.

He added: “We tend to look at something like LawnGuru and laugh – ha ha ha, group of students cutting the grass,” he said. “Better not to. If people don’t realize it and don’t react to it, they’re asking for trouble.”

Of course, it takes more than moxie to launch a successful on-demand business. As Brophy said, entrepreneurs need to master their technology, logistics, market fundamentals, customer profile, etc. “But when you do, it can be applied anywhere in the world,” he said.

So it helps that LawnGuru as a company is only a year old, co-founders Durrant and Bertrang have been in the lawn care business for about 20 years between them. They started mowing lawns for a change of pocket during high school, and Bertrang set off across the state of Michigan to work at that business.

Before launching LawnGuru, they grew their business from 10 clients to over 300 and made over $2.5 million in revenue per year.

So they weren’t exactly beginners. And they were smart about choosing a business model. At first, they considered franchising their lawn care operation, but found that the on-demand model was easier to grow.

This know-how helped persuade the company’s new investors to invest their money. “It is the experience of its co-founders and management team that truly separates the platform from its competitors and sets the company up for explosive growth,” Sierra Wasatch partner Todd Sullivan said in a written statement.

It will take Michigan residents some time to get used to thinking of their state’s economy in the new terms created by technology and on-demand services. Search the internet for on-demand companies and you’ll find a list of companies whose names look like typos – Shyp, Resy, Cliqk, Zeel, Drizly.

Yet today, Michigan venture capitalists are not just pouring money into strangely-named companies, but backing entire industries that seem far removed from the giant corporation model and heavy manufacturing of the 20th century. century. LawnGuru, now available on iPhone and Android models as well as through a desktop app, is just one example.

Brophy said it takes some getting used to.

“I guess we have to bend the metal somewhere, but that’s not necessarily how people succeed with businesses,” he said. “And who claims it? The customer asks for it. Get it to me fast, cheap and high quality, and you get my deal. That’s basically what’s happening.

Contact John Gallagher: 313-222-5173 or [email protected] Follow him on Twitter @jgallagherfreep.