YC-backed Cleanly merges with NextCleaners to vertically integrate

Cleanly, the YC-backed company that looked to bring tech to the laundry industry, has today announced a merger with NextCleaners. The New York-based companies signed an all-stock deal after more than a year of negotiations, with Cleanly founder and CEO Tom Harari serving as Chairman of the Board and Next CEO Kam Saifi will stay in the Chief Executive role at the new company.

The new company will be called By Next. The terms of the deal were not disclosed.

Cleanly launched out of YC in 2015 with a plan to use data around delivery to optimize laundry pick-up and drop-off in a complicated market like New York. Using hyper specific local data, like if a building has a buzzer or a doorman, or if there’s parking on a certain street, Cleanly aimed to be able to deliver or pick-up laundry at almost anytime, on any day. That speed, and the user convenience it would provide, would allow for Cleanly to partner with third-party laundry services while capturing market share with users.

Over the next two years, the startup would deal with several challenges. The first was that the on-demand space cooled down considerably, with VCs focused on profitability. Indeed, the on-demand laundry space in the New York area has been hammered, with Washio closing down and FlyCleaners suffering through several obstacles over the past year, including shutting down its LIC plant and laying off more than 100 employees.

The second, more specific challenge, was that in the midst of that focus on economics, Cleanly realized it needed to boost gross margins, and that the best way to execute on that was to become vertically integrated. In essence, the company needed to stop using third-party laundry services and bring the actual laundry in house.

NextCleaners, focused primarily on dry cleaning with a small home cleaning business on the side, has been growing its footprint in the New York area with more than 15 retail stores. The company had also made an impression as one of the few eco-friendly dry cleaners in the market.

With the launch of the newly merged company, By Next, users will have options to book wash and fold, dry cleaning or home cleaning services with options for delivery or pick-up and drop-off in store.

AddVenture led Cleanly’s Series A and also participated in the merger through an investment in the new company. Other existing Cleanly investors include Initialized Capital, AltaIR, Millhouse Capital, Y Combinator, Ludlow Ventures, Haystack Ventures, and a bunch of angel investors including Paul Buchheit.