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A payments company looking to challenge Square for small business has just raised new funding.
But New York-based Squire Technologies is not looking to capture the massive trillion-dollar payments market in its entirety. Instead, the four-year-old is betting it can take market share by offering bookings and payments to hair salons, which Squire says are well behind in bringing their products online. companies.
On Wednesday, Iconiq Capital, a multi-family firm that invests on behalf of top tech executives including Facebook’s Mark Zuckerberg, LinkedIn’s Reid Hoffman and Twitter’s Jack Dorsey, led a $ 60 million Series C funding round in the company for a valuation of nearly $ 250 million. .
According to Yoonkee Sull, director of Iconiq who led the transaction, part of the rationale for the investment lies in the increase in male grooming in recent years.
“The barber shop and men’s grooming as a male industry has grown very robustly… from an interest perspective, which has been a boon to the barbershop industry,” he says.
Hair salons were among the hardest hit at the start of the coronavirus pandemic. As a result, Squire also saw its income drop significantly. But as hair salons reopened as core businesses and sought to control the number of customers in their stores, Squire’s revenue grew more than expected, by around 400% from May to December, according to the reports. co-founders of Squire, Songe LaRon and Dave Salvant.
The outbreak came even though Squire waived its monthly subscription fees of $ 30 to $ 250 for businesses during the pandemic. But the company also charges a fee on each customer reservation, which made up for the shortfall as men visit the barber more often than women go to salons – with reservations accounting for around 80% of Squire’s revenue in 2020.
The duo refuse to give a specific amount.
But Squire’s funding also comes at a time when more and more startups are offering software to a specific industry. While many startups highlight the enormous size of their potential market by targeting a large industry (mattress seller Casper Sleep, for example, said he wanted to take over from the “sleep economy”), Squire is more focused. The logic is that by targeting the very specific needs of the currently cash-focused barber industry, the business can tap into deeply loyal customers and grow further – for example in customer relationship software or even in insurance – so that in the end, by just developing product and functionality, “we’re going to need fewer customers to create a really massive business,” says LaRon, CEO of Squire.
Having started a hair salon themselves in 2015, after stints in corporate law (LaRon) and business school (Salvant), the founders say there are realities in the industry that make Square imperfect for hairdressers.
“Often times, these companies have to adapt their business to generic software like Square that ignores the fact that barbers want to receive tips every day rather than at the end of the day,” says Salvant. “And look, 80% of software is the same, but it’s that 20% that makes these guys’ lives better. This 20% is our critical advantage. “
Squire and its investors are not alone in this trend of looking for ways to focus on specific parts of the overall pie. One example is Shopify, which instead of looking to take over all e-commerce, is focusing on small and medium businesses. It has since grown into a company with a valuation of $ 132 billion.
Others more comparable to Squire include Boulevard, who helps salons with bookings and payments and who recently raised $ 27 million. Additionally, Mindbody, which began selling to fitness and yoga studios before adding salons, was acquired for $ 1.9 billion by Vista Equity in early 2019.
The plan to keep Squire in the hairdressing market, however, raises the inescapable question: by focusing solely on hair salons, isn’t the company yet limiting its growth potential? LaRon and Salvant, for their part, say they think the market is way bigger than most people think – a sentiment Sull agrees with.
When asked what the size of Squire’s total market might be, Sull refuses to give a number. When asked if he thought the investment could be a moderate hit or a runaway hit, like Shopify, he notes, “Shopify is a big bar … But I think there’s a bigger one. business here than most people think. “
The news of Squire’s Series C comes just six months after the company raised $ 34 million for its Series B.
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