What’s Next for SweepSouth?

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SweepSouth, the South African gig platform matching domestic workers with residences in need of a good cleaning, has ambitions to operate across the African continent. 

The company has already expanded geographically and horizontally since its founding in 2014. Last month SweepSouth began operating in Nigeria. This follows last year’s move into Kenya. And the company has also expanded its service offering beyond domestic help to include gardeners, plumbers, electricians, builders, movers, and other services.

The total market opportunity is unclear. One recently released forecast estimates the global home cleaning services market alone will grow from US$5.6 billion in 2020 to US$10 billion in 2026. 

SweepSouth was formed by the charismatic entrepreneur Aisha Pandor and her technologist husband Alan Ribic. The couple tells a familiar startup origin story. A new business idea emerged from a personal need. In their case, the need was how to find reliable, vetted domestic help. 

These origin stories are usually authentic enough. But they are also an essential element of successful startup storytelling. Along the lines of:

“We couldn’t find a solution to a personal challenge, so we started a company!”

From this original notion of an unaddressed pain point emerged SweepSouth, which soon became South Africa’s Uber for domestic help (forgive the cliche). And Pandor became one of the more familiar faces in South Africa’s dynamic startup community. 

SweepSouth raised its first seed round in 2015 and has raised US$6 million in total, with its most recent venture round coming in 2020. 

While that is a fair sum, the amount being invested in gig platforms for home-related services does not seem to be in the same league as some other sectors we cover. 

Let’s look at the payments company Yoco, as one example. This South African startup launched in Cape Town just a year before SweepSouth. Yet Yoco has raised about US$106 million to SweepSouth’s US$6 million. 

Raising money isn’t everything. And we’ve argued here against using venture funding as a proxy for success. 

That said, achieving scale is hard, and it is usually expensive. So like it or not, how much money an industry is raising either tells us that relatively little initial capital is needed to propel the business forward. Or that investors simply don’t see the path to unicorn status that they see in other sectors like fintech. 

Home services platforms also present a classic business model challenge. The dreaded two-sided marketplace. 

This model requires matching a sufficient supply of skilled and vetted tradespeople or domestic workers (or whatever the platform aggregates) with sufficient demand for their services among the consuming public. While technology can make every step of the process more efficient, it is still difficult to reach equilibrium. And it is even harder to scale this model across multiple markets. 

Home services platforms that follow an on-demand model rather than a lead-generation model may be on a better path to scale. Lead generation services charge for each lead, typically, whether or not the leads convert. This can create constant friction and churn as service providers rarely believe the leads are of high quality. 

In an on-demand model, the platform typically takes a piece of every transaction. And they usually build in incentives for both sides to continue using the platform rather than bypassing it for future interactions. For example, offering insurance to the service providers or service guarantees to the consumer. Plus they generally offer a venue for dispute resolution and so forth. 

The subscription model is another option. For example, a platform could offer unlimited home or office cleaning for a fixed monthly fee with different tiers of service.

Regardless of the revenue model, these platforms will struggle without a good balance of consumers and service providers. Without enough of both, the consumer experience is likely to be poor. This often leads to heavy marketing investments to find both buyers and sellers. 

So it’s probably not a coincidence that most of Africa’s first several tech unicorns are fintechs rather than on-demand home services platforms. 

The pandemic was a significant headwind for these platforms, including SweepSouth. As lockdowns set in, homeowners all but ceased inviting strangers into their homes, regardless of the purpose. Still, the company survived. And now SweepSouth is reporting that its volume is back to pre-pandemic levels. 

SweepSouth and many of its peers and competitors present themselves, not unfairly, as advocates and enablers of informal workers, who struggle to find steady work at fair wages. Informal workers also struggle with access to financial services and protection from exploitation. 

These platforms not only provide access to jobs but also collect payments and guarantee payment that would not be there but for the platforms. And in turn, they surrender a portion of their wages in exchange for these services and protections. 

In an interview with This Day Live in Nigeria, Pandor presented its market entry as helping domestic workers regain economic security post-pandemic. 

“The impact of COVID-19 on the livelihoods of domestic workers has been significant, with the report’s findings showing that in Nigeria about two in five domestic workers lost their jobs due to the pandemic. We are hopeful and excited that our entry into the Nigerian market will have a positive impact on the lives of domestic workers in the country.”

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