A rapidly growing storage-by-the-bin startup has raised $8 million in venture capital.
New York City-based MakeSpace announced the new round of funding May 1. The company drops off and picks up plastic storage bins to customers in the Big Apple and stores the bins. Rates start at $25 a month.
Upfront Ventures led the funding round. Other investors in this round are Founders Fund, OATV, Lowercase Capital, High Peaks Venture Partners and Collaborative Fund. All told, MakeSpace has raised $10.1 million in venture capital.
Amazon.com in reverse?
Mark Suster, general manager of Upfront Ventures, was an early investor in MakeSpace. He said the company is poised to disrupt the self-storage industry the way Amazon.com did the retail industry.
In a blog post, Suster said the self-storage industry faces the same disadvantages as brick-and-mortar retail stores—limited amounts of space at any one location and high real estate costs.
“Today’s $24 billion storage market in the U.S. has these same key disadvantages, and that was the genesis of Sam Rosen’s initial idea for MakeSpace, which I initially funded 15 months ago,” Suster said.
Mark Suster initially invested in MakeSpace 15 months ago.
Suster looks at MakeSpace as Amazon in reverse. While Amazon challenged existing distribution channels to deliver products to consumers, MakeSpace is “blowing away existing physical infrastructure to help you store the things you want to keep—just not at your home,” he said.
Over the past year, demand for MakeSpace’s service has outstripped its capacity, Suster said. With the fresh round of funding, the company will add vans and drivers.
Next steps
Rosen, founder and CEO of MakeSpace, told The SpareFoot Storage Beat that the company is growing quickly, with double-digit growth week to week and triple-digit growth month to month.
In addition to buying new vans and hiring new drivers (which the company refers to as Uploaders), the company is hiring software engineers, customer support staff and a warehouse manager. The company currently has 20 employees.
The $8 million in funding will allow MakeSpace to add drivers and vans — and, therefore, customers.
Rosen told Crain’s New York Business that much of the new funding will be used to upgrade the company’s technology. The company plans to launch an iPhone app this spring that will enable customers to take photos of their stored items, track drivers en route, tip drivers and leave reviews. MakeSpace recently redesigned its website.
Crowded field?
MakeSpace is the second storage-by-the-bin service to receive funding lately. San Francisco-based Boxbee announced a $2.3 million funding round April 16. That service recently expanded to New York City.
UrBin is a similar startup operating in New York City. Even self-storage REIT CubeSmart entered the storage-by-the-bin space earlier this year with the launch of CubeSmart Direct in Manhattan. Several other companies with the same business model have sprung up around the country.
“Customers are fed up with the traditional incumbents and demand something better,” Rosen said. “We think there is a huge opportunity to make ‘making space’ a lot easier and more efficient.”
