Managed by Q, an On-Demand Start-Up, Raises $25 Million

Ian Pajer-Rogers |

From The New York Times:

by Katie Benner

Managed by Q began two years ago during a boom in on-demand start-ups, offering a service to clean offices in New York City whenever clients needed it.

But unlike similar start-ups, which typically use contractors to fulfill an on-demand service, Managed by Q decided to do the opposite. The company hired its cleaners as full- and part-time employees, paying them more than the minimum wage and providing health care and other benefits.

Rather than collapse under the weight of those expenses, Managed by Q expanded into three more cities — Chicago, San Francisco and Los Angeles — and today it has about 400 employees. In addition to cleaning, the company provides services such as maintenance, information technology support, office supplies and security.

Now Managed by Q has raised $25 million from new investors: GV, formerly Google Ventures, and Kapor Capital. M.G. Siegler, a venture capitalist at GV, will join the board.

Managed by Q and its investors declined to disclose the company’s valuation, but they said it had increased from a $15 million fund-raising in June. Managed by Q also previously raised about $2.4 million in convertible debt, which has since converted to equity.

Even as it has become harder for some start-ups to raise money, Managed by Q’s most recent round did not include the sorts of terms that can benefit an investor over the start-up, such as guaranteed payouts for investors, the company and its investors said. Investor-friendly terms have become more common as financing has become more difficult to obtain.

“This is a hairy fund-raising environment, so we feel great about our new partners and the deal,” said Dan Teran, the chief executive of Managed by Q.

Since Managed by Q decided to hire its employees outright, other on-demand companies have also moved away from contractors. They include Honor, which finds home care providers, and Shyp, an on-demand mail service.

“Dan is aligning investors and entrepreneurs around the people that work for the company,” Mr. Siegler said. “People can start careers at Q and hopefully they’ll have skin in that game and stick around because they believe they can provide for themselves and their families.”

Managed by Q faces competition from Eden, a start-up that began by providing on-demand tech support to consumers and later shifted focus to businesses that needed services like tech support and cleaning. But Managed by Q is the largest company in its category, and it plans to use the new money to deepen its presence in cities in which it operates, as well as build new technology to help it better run and manage office spaces.

Mr. Teran said Managed by Q was on a path toward becoming profitable, with the company improving its technology to help keep its operations lean.

In addition to hiring its service workers as employees, Managed by Q has pledged to give those employees 5 percent ownership of the firm starting in July. The plan was announced last month by Mr. Teran and Thomas E. Perez, the Labor secretary.

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