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Local services marketplace Zehitomo nets $7.5m in series B round

Launched in 2015, Zehitomo connects people who look for services with professionals such as photographers, yoga teachers, and consultants, among others. Last year, the Japan-based firm developed an AI feature that helps it select the right professionals that suit a client’s requirements, beefing up its recommendation system.

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Now, the company has just raised US$7.5 million in a series B funding round led by DG Daiwa Ventures.

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Venture capital firm Energy and Environment Investment, real estate developer Mitsubishi Estate, Persol Innovation Fund, AirTrip, as well as existing investors Coral Capital, SMBC Venture Capital, Mizuho Capital, and some individual investors also participated in the round.

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Photo credit: Zehitomo

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According to a statement, the company will use the new funds to hire talent as well as drive the supply side of local services online.

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Jordan Fisher, CEO and co-founder of Zehitomo, said their service works differently from the traditional model where platforms take a margin in between transactions. “Our business model is lead generation, which means that the professionals pay to be introduced to client leads that they are interested in,” he explained.

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The company claims that more than 200,000 businesses have registered on the platform to date and that more than US$100 million worth of job requests were generated via Zehitomo last year.

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However, Fisher said that during Japan’s state of emergency, which the country declared in response to the Covid-19 threat, Zehitomo saw fluctuating demand, with the largest drop seen in events-related services such as photography and emceeing. Meanwhile, there was an increase in demand for online lessons, wellness practitioners, and certain home improvement services.

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Demand has since recovered, Fisher said, vastly due to the country easing into normalcy. He noted, however, that Zehitomo is still a supply-constrained business.

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“Consumers are searching online, but local service professionals like plumbers still use fax machines. So our challenge has been how fast we can bring the supply side online,” he said.

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For the company, the pandemic – which has made getting new clients via offline means even more challenging for service providers – is an opportunity to help more professionals transition online.