PipeDreams, an HVAC Startup, Secures $25M Funding from Ex-Nextdoor Executive

Dan Laufer made a promise to himself: he would never start another company after selling his apartment rental platform, RentLingo, in 2021. However, as head of product and marketing at Nextdoor, he couldn’t ignore a looming issue that needed solving.

“The top use of Nextdoor is people looking for providers, HVAC especially,” Laufer told TechCrunch. “There were these gaps on the consumer side, the satisfaction with the experience, it didn’t feel modern. The other big trend I saw was the silver tsunami. All these baby boomers who own these and don’t necessarily have an exit plan.”

Inspired by these observations, Laufer created PipeDreams, a startup that acquires and scales mom and pop HVAC and plumbing companies using its software that aids in scheduling and marketing. The company offers business owners the opportunity to retire without losing their employees, name, or brand. Alternatively, they can become a part of a larger company with more resources.

PipeDreams recently secured a massive $25.5 million Series A funding led by Canvas Ventures and Plural Platform, with additional investments from Tony Xu, the founder of DoorDash, and Thomas Layton, the former CEO of OpenTable. With this capital, PipeDreams has purchased nine companies and currently operates in the San Francisco Bay Area, Tucson, and Denver with plans for expansion.

“The beauty of this industry is it’s massive, there are over 100,000 businesses doing plumbing and HVAC,” Laufer explained in regards to the potential of the U.S. market. “We intend to keep their brand. A lot of these people have their name on the truck, it’s very personal.”

PipeDreams’ strategy is a unique twist on the traditional private equity roll-up model. While PE firms typically buy smaller niche businesses and combine them into a larger company with the intention of selling it for profit, PipeDreams also leverages debt to acquire businesses outright. However, unlike traditional PE firms, they are not bound by strict timelines and can focus on long-term growth rather than quick returns. The company has a $15 million debt facility available and plans to use its recent equity raise to improve its software. Laufer also predicts that future funding rounds will involve more debt than equity.

Roll-up strategies are not commonly seen in the VC-backed startup world, with the closest comparison being Amazon aggregator companies like Perch and Thrasio. However, unlike these aggregators, PipeDreams is not reliant on a larger external company like Amazon and has stronger connections with their customers. Additionally, PipeDreams is addressing the skills shortage in the HVAC and plumbing industries by launching an apprentice program to train employees on the job.

Laufer envisions PipeDreams expanding beyond HVAC to other categories, such as electricians. “We recently acquired a company, and the owner celebrated by saying, ‘my business is off to college,'” Laufer shared. “‘I grew it up and it’s off to its next chapter.’ I love that description. That’s how we approach our acquisitions.”