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Austin’s Newest Unicorn: RigUp Lands a16z-led $300M Series D

Austin is hot this month, and we’re not just talking about the temperature.

Two days ago, we wrote about AI startup SparkCognition’s $100 million Series C.

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Now, RigUp, an Austin-based marketplace for on-demand services and skilled labor in the energy industry, has raised a $300 million Series D round led by Andreessen Horowitz (a16z). The round values the company at $1.9 billion, according to the Wall Street Journal. It also marks the largest funding round raised by an Austin company in 2019 so far, according to Crunchbase data.

Existing investors Founders Fund, Bedrock Capital, and Quantum Energy Partners also put money in the round in addition to new investors UK-based Baillie Gifford and Brookfield Growth Partners.

RigUp’s Series D comes just nine months after its $60 million Series C. Since its inception in 2014, the startup has now raised more than $450 million.

RigUp’s platform matches contract workers with energy companies operating in the upstream, renewables, midstream, and downstream sectors. The company said that it expects to exceed $2 billion in gross service volume on its platform this year, up more than 200 percent from 2018.

David George, general partner at Andreessen Horowitz, will join RigUp’s board, as part of the financing.

In a prepared statement, George said that RigUp stands out in the energy labor market “with much needed technology” that “fundamentally allows for better matching of supply and demand, resulting in significantly improved time-to-hire and visibility for both the independent contractors searching for the right projects and the energy companies looking to fill jobs with higher quality personnel.”

More than 5,000 contractors and over 250 energy companies and operators use the platform, which operates under the premise that blue-collar labor is difficult to find and in high demand.

“Field work, largely performed by a workforce of highly-skilled independent contractors, has typically been staffed through a fragmented network of small brick-and-mortar firms,” said RigUp CEO and co-founder (and former energy investor) Xuan Yong. “That’s inefficient for the companies that need to quickly staff projects and manage labor costs, and it doesn’t give independent contractors access to all available opportunities.”

Its platform is appealing to field workers, according to a16z’s George, who said in a blog: “Not only do workers have faster access to the roles they want, RigUp allows workers to get paid faster, access health insurance, accumulate reviews and build their reputation, and manage their up-to-date certifications all in one place.”

To George, there is still plenty of opportunity for the young company. He estimates that RigUp has  about a 2 percent market share in its core market, but sees more than 20 percent market share in some of its most mature sub-categories, “suggesting increasing returns the longer RigUp operates in a market.”

“Given the impending labor shortage in the energy industry and the shift to a new generation of workers, we believe this offering is potentially transformational,” George said.

RigUp said it plans to use its new capital to expand its services into renewable energy, midstream oil and gas, and downstream operations. It also will continue to hire both at its Austin headquarters and out of its Denver office. RigUp currently has more than 300 employees across the United States.

Besides being large rounds, SparkCognition and RigUp’s latest raises signal something exciting for the Austin market: maturity and increased global investor interest. Silicon Valley-based A16z led this round, which also included participation from UK-based Baillie Gifford. March Capital Partners out of Santa Monica, Calif., led SparkCognition’s Series C, which also included participation from Singapore’s Temasek. For us on the ground here, this feels like validation for all the hype surrounding Austin as of late.

Illustration: Li-Anne Dias

 

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