- Uber-for-Laundry startup Sudshare has raised a $10 million seed round.
- The company has 70,000 gig workers doing laundry for the app already.
- Past failures for similar services include Washio which lost millions.
Investors are taking the Uber-for-laundry model out for another spin cycle. Sudshare, a Minneapolis startup that’s been operating for three years, announced Wednesday it’s $10 million to build out its gig-worker-powered laundry service.
Among investors in the company’s seed round is Headline, a VC firm that has backed several two-sided marketplace businesses including GoPuff. Other investors include the CEO of Cameo as well as an Instacart co-founder.
Mort Fertel, Sudshare’s CEO says his company already has 80,000 customers and is profitable. The company plans to use the capital to expand beyond its current footprint of 400 cities in the US and market to more customers and workers (or “Sudsters” as the company calls its laundry doers).
The business is pretty by-the-books for marketplace-based startups. From the Sudshare app, users can set up a time for a worker to come to their house and pick up their dirty laundry. The Sudster then does the laundry, folds and packages it, and drops it off the next day.
Fertel said the idea for the company came from his wife who was tired of doing the laundry for their family of seven. One of their kids built the app and the company started taking on workers and customers. Fertel has a varied business background, including spending the last two decades running a marriage counseling service.
If Sudshare’s model feels like a flashback to the Heydays of the “Uber for X” startups from seven or eight years ago that’s because it is. As Uber and Lyft took off around 2013 and beyond, scores of startups tried to marry its model of matching gig workers who could provide a service on demand.
Most of these startups died quickly, and few areas saw as many washouts as laundry and cleaning services. A high-profile failure was Washio, which raised around $16 million from VCs including Canaan Partners but imploded amidst high costs and high customer turnover.
Yet, some startups from the era survived. Rinse, which has raised $25 million, still operates in about half a dozen cities.
Fertel is well aware of past failures in app-enabled laundry. He is also quick to point out that Sudshare is different. For one, most of those companies weren’t relying on gig workers to do the laundry; Washio workers did pick-ups and drop-offs but the cleaning was done at commercial laundromats. The same is true for Rinse and its “Valets.”
Sudsters meanwhile, are doing loads of laundry at their houses and apartments. That, Fertel said, has enabled the company to expand quickly to hundreds of cities with little to no marketing costs. The expansion has been largely according to word of mouth, Fertel, although a cursory look online shows that Sudshare is certainly running Google search campaigns.
Fertel said his company also has better margins because it doesn’t do dry cleaning.
“The company who succeeds in this space is going to be the company that specializes in laundry and is not distracted and bogged down in dry cleaning,” Fertel said.
Rinse’s CEO Ajay Prakash told Insider in an interview that his company does both dry cleaning and laundry. He also said Rinse is profitable in all of the cities it operates in but is losing money on operational costs. Prakash projects the company will be profitable overall this year.
Fertel argues that Sudster is better positioned than past failures because the gig model has exploded in the last few years, especially during the pandemic. More people are working from home than ever before, and he says gig workers want that option as well.
It’s why he said they’ve been so quick to get 70,000 Sudsters onto the platform. That pitch was enticing enough for investors to look past their concerns over the failure rate in the Uber-for-laundry space.
“Instead of being one driver, one car, one ride, this could be a Sudster picking up several loads of laundry and having a couple of machines in their garage,” said Nicole Farb, a partner at Headline who lead the firm’s investment in Sudshare .
The company says the economics are good for users and workers. It costs customers $1 per pound of laundry, and the Sudster gets 75 cents. The average order is 39 pounds. One Sudster who previously spoke to Insider said she’s making $5,000 a month doing laundry for the service. Although rising energy costs will eat into the economics for Sudsters. Fertel said the company recently instituted an optional gas tip on top of the regular tip, which he says most customers are using.
Economics aside, there are other issues that have cropped up when handling people’s dirty laundry. One Sudster said a particularly bad batch had worms in it. The company said cases like that are exceedingly rare.
Fertel plans to use the new capital to ramp up marketing efforts and bring on new staff. Investors are looking down the road toward expanding into business customers such as restaurants, boutique hotels, and municipalities.
He pushed back on the worry that going the route of gig workers doing laundry rather than professional fluff-and-folds will result in a less consistent experience. Because customers rank Sudsters, the app’s algorithm prioritizes people based on their scores. So the best Sudsters rise to the top.
“If they don’t perform, they’re not getting any orders,” Fertel said.
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