A new venture capital fund backed by one of Europe’s largest insurers is investing in a British technology start-up which is aiming to do to the home services market what Purplebricks has done to traditional estate agents.
Sky News has learnt that AV8 Ventures, which was established with financial support from the German insurance giant Allianz, is leading the Series-A funding round of Hometree, which has spent the past three years building its share of the boiler installation market.
The $8.5m (£6.5m) fundraising, which will be announced on Wednesday, will be used to aid Hometree’s expansion throughout the UK and enable it to begin offering a wider range of domestic services.
The company was founded by Simon Phelan, a former executive at the financier Jon Moulton’s private equity firm, Better Capital, and Andreu Tobella, who previously worked at Hive – British Gas’s connected home division.
Hometree’s existing backers include Mr Moulton’s family office, Perscitus, and VC investors DN Capital and LocalGlobe.
They are also thought to be participating in the new round of funding.
Hometree aims to simplify a convoluted and frustrating experience for consumers who have faced either paying a premium to use a prominent brand such as British Gas or an independent tradesman who may not have access to the same range of financing options as a large company.
The UK boiler installation sector is highly fragmented yet lucrative, with 1.7 million units installed each year.
Launched in 2015, Hometree has just unveiled a major television advertising campaign to promote brand awareness and promising consumers that it offers a more transparent, convenient and trustworthy service than its peers.
Sources said that the business was on course to record year-on-year revenue growth in 2018 of more than 400%.
The company has unashamedly sought to ape Purplebricks’ strategy, recruiting James Kydd, a former executive from the online estate agent, to act as an adviser.
Hometree’s emergence comes at a time when tech behemoths such as Amazon have also moved into the home services market, notably through the takeover of Ring.com earlier this year.
AV8 Ventures’ decision to lead the Hometree investment marks one of the new fund’s first deals and, with Allianz’s backing, will underpin the company’s intention to explore moves into smart-home and insurance offerings.
It is run by Miles Kirby, a well-known figure on the UK’s venture capital scene who led technology investments at Oxford Capital and as a managing director at Qualcomm Ventures.
Mr Kirby previously sat on Hometree’s board during his time at Oxford Capital.
Hometree declined to comment ahead of the formal announcement of its fundraising.