As investors have soured on a number of “Uber for X” business clones, there’s one category of startups VCs can’t stop throwing money into: on-demand storage.
“This is the going to be the sleeper winner of the on-demand economy,” Clutter cofounder and CMO Ari Mir told Business Insider.
It’s not just Mir’s belief. He’s been able to convince some of the top venture capital firms around the world that picking up people’s items and storing them in far-flung warehouses outside of cities is the next big business.
On Tuesday, Clutter plans to announce that it raised $US70 million from one of Europe’s top VC firms, Atomico, alongside GV (Google Ventures) and existing investor Sequoia. The latest funding round raises Clutter’s total funding to $US100 million.
The Los Angeles-based startup’s fundraising is only the latest in a spurt of venture dollars invested the space. In April, MakeSpace announced that it had closed another $US30 million, bringing its total amount raised to $US56 million. Another San Francisco startup, Trove, launched at the end of May with $US8 million raised.
“The on-demand storage space is one area we have been watching and where companies are still showing strength despite slack in the on-demand space overall (with Q1’17 sinking to deal and dollar funding levels previously seen in the same quarter three years previously),” former Business Insider employee Marcelo Ballvé, research director at CB Insights, told Business Insider in late May when Trove launched.
While storage isn’t the most glamorous business to invest in, venture capitalists are starting to believe it as an industry ready to be changed drastically in a similar fashion to how Uber changed the taxi market
The storage market is already a $US30 billion dollar business with 11 million households renting a storage unit. Startups like Clutter are bypassing the storage units though in pricey downtown locations and instead rent space in areas outside cities where large warehouses come cheap. With the new round of funding, Clutter hopes to kick off an even larger expansion in 2018, including to Europe with Atomico’s help.
“Storage is one of the few markets undisrupted by technology — Clutter has had an incredible start, but there’s so much more to do,” said Hiro Tamura, a partner at Atomico, in a statement to Business Insider. “As urbanisation increases and rents rise accordingly, more needs to fit into less available space and this has led to a $US30 billion market opportunity in the US alone.”
Instead of renting an individual storage unit, Clutter’s customers can request their possessions get picked up from their own house or office. The items are photographed and put in an online catalogue as they’re whisked away to a storage facility. When a customer needs their winter clothes or their couch back, it’s as easy as a few taps in an app to select it to be returned to you.
Already the company is generating “tens of millions” in revenue from its subscription plans that start at $US7 a month, Mir said.
“The biggest misconception is that it’s hoarders,” Mir said. “We have college students spending $US7 a month to store their surf board.”
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