EVP investee company Oneflare, a trades-focused online marketplace for local services, has been acquired by tasks outsourcing online marketplace Airtasker (ASX: ART) for $9.8 million.
That was less than a quarter of the value implied by an investment in Oneflare by Domain Group six years ago.
The purchase price comprises $7.55 million in Airtasker shares issued at 43 cents a share and $2.25 million in cash. Half of the shares will be escrowed for 12 months and the other half for 24 months.
The acquisition followed a substantial hit to Oneflare’s revenue late last year resulting from the onset of the Omicron COVID-19 strain.
Airtasker is Australia’s leading local services online platform and Oneflare the third largest, serving more than 540,000 customers and 14,500 verified businesses annually. Oneflare’s direct competitor hipages is the second largest in the category.
Announcing the acquisition on 4 May, Airtasker said the acquisition price represented an attractive 1.6x Oneflare’s expected 2022-23 financial year revenue of greater than $6 million.
The acquisition would further accelerate Airtasker’s strategic expansion into high-value service categories including trades, home improvements and professional services.
Airtasker said it would fund the cash component of the acquisition, plus capital raising costs and planned investment in Oneflare, through the underwritten placement, subject to shareholder approval, of about 14.5 million new fully paid ordinary shares at 43 cents each to raise about $6.25 million. Airtasker directors were to subscribe for $3.55 million worth of these shares.
Airtasker would also provide a share purchase plan for Australian and New Zealand retail shareholders to raise a further $1.2 million.
Founder and chief executive of Airtasker Tim Fung said the combined Airtasker and Oneflare marketplace would better serve the mission of empowering people to realise the full value of their skills, by providing service pros – including both independent taskers and verified businesses – access to more job opportunities than ever before.
Oneflare chief executive Billy Tucker said: “Momentum is key in any start-up – or any business for that matter – if you lose momentum, even for a moment, you’d better have a strong balance sheet and a crack team to win it back, otherwise, you may just become very vulnerable, very quickly.
“2021 was our biggest revenue year, at more than $14.5 million but it wasn’t enough. When Omicron arrived at the tail end of the year, revenues dropped 15-20% and by late November it was obvious our balance sheet wasn’t going to be strong enough to see us through yet another drawn-out COVID crisis.
“And yet, truth be told, the fact that Oneflare Group was acquired by Airtasker this week is a story only half-told by our sudden vulnerability. The other half is that it makes perfect sense for Oneflare to join forces with Airtasker given the power of our individual marketplace offerings is multiplied several-fold when brought together, creating the leading place to get stuff done in Australia, and then the world.”
In May last year, Airtasker acquired US local services marketplace Zaarly for around $3.4 million, a move it said would “jump start” expansion in the US.
EVP has had a long involvement with Oneflare which was founded by Adam Dong in 2011.
In 2013, Les Szekely led an angel investor syndicate which became Oneflare’s first external investor. The following year, Szekely and Howard Leibman formed Equity Venture Partners, now EVP. In July 2014, Equity Venture Partners acquired the interests of several minority shareholders to become Oneflare’s largest non-founder equity holder.
When Equity Venture Partners sought to raise its first fund in 2016, Szekely and Leibman outlined their recent investment experience in the fund’s IM. They said they had achieved valuation uplifts of more than 14 times across seven investments in an average of 5.4 years. Oneflare was among the investments named.
Also in 2016, Domain Group, then part of Fairfax Media, took a 35% strategic partnership stake in Oneflare for $15 million. The deal valued the business at more than $40 million.
The same year, News Corp reportedly invested $40 million for a 25% stake in Oneflare’s direct competitor hipages.
Airtasker received financial advice on the Oneflare acquisition from Morgans and legal advice from Maddocks.
Image: Oneflare’s back office team.