Over the last few years a new segment of the storage industry emerged: on-demand storage.
The concept is fairly simple. Customers pack up their belongings and a company comes and picks them up and puts them in storage. When a customer wants something back, they use an app or website to request a delivery. The new crop of startups promised to disrupt the traditional self-storage industry by offering a better, more convenient alternative.
Many services failed. CubeSmart even entered the space briefly, but ended up shutting down its New York valet service. But several companies have stuck around, expanding to new cities and attracting significant investor capital.
Now one of those companies, Los Angeles-based Clutter appears poised to land the nascent industry’s biggest investment yet: up to $250 million in funding.
TechCrunch reported yesterday that Clutter is on the verge of closing a funding deal valued at $200 million to $250 million. The investment is led by Japan-based holding giant SoftBank, which has invested in other U.S. tech companies like Uber, WeWork, Fair, DoorDash, and Compass.
From the TechCrunch report:
Sources tell us that term sheets are out but have yet to be finalised while investors go through due diligence, and that currently the plan is for the round to be led by SoftBank.
Clutter’s CEO and co-founder Ari Mir declined to comment for this story, as did SoftBank. Other investors contacted for the story did not respond.
Should the funding go through Clutter will have raised more than any of its rivals in the space combined, adding to the $96.3 million it has raised to date. Its next biggest competitor is MakeSpace with $57.6 million raised to date. New York seemingly has an endless number of such companies including Stashable (formerly Box Butler), StorageBlue, ZippBoxx, and RedBin to name a few. There’s even more across the country including Omni, Trove, Boombox Storage, Squirrel Box, and dozens more.
Clutter has operations in the Bay Area, Southern California, Seattle, New York and Chicago. The new funds would likely allow the company to expand to other cities.
Instead of disrupting traditional self-storage, which is at the tail end of its biggest development growth spurt of all time, on-demand companies seem to have carved out their own niche appealing to urban apartment dwellers that might not have otherwise used traditional self-storage.
As TechCrunch puts it:
For it and a number of its competitors, the target users are consumers based in urban areas who live in smaller spaces with less storage options; have the disposable income not only to buy stuff but to pay to keep it somewhere else; and likely already use of other app-based on-demand services for food, transport, work-space and so on, making them familiar and ready to work with startups offering the same services to manage their material possessions.
Of course traditional storage companies would like nothing more than to target these millennial-age and younger customers as well. But if on-demand companies can continue to raise funds and grow at this pace, traditional storage operators may need to start taking the threat posed by the upstart industry more seriously than they have in the past.