When it comes to construction projects, any type of delay can result in increased costs both for the contractor and their customer. Shortages of certain materials and supply chain constraints in recent years haven’t helped.
So it’s not a huge surprise that Canadian construction tech startup RenoRun, which has built an e-commerce platform for construction and building materials, is today announcing a $142 million Series B funding round co-led by Tiger Global Management and Sozo Ventures. Notably, the financing is a significant jump from the $17.1 million Series A that Montreal, Quebec-based RenoRun announced in November 2019. With the latest round, RenoRun has raised a total of $173 million.
Unfortunately, the company declined to reveal at what valuation this round was raised, but the sheer size of this round caught our attention. It is also interesting that Tiger Global is a co-lead as it is yet another example of the investment giant backing a construction tech company — a growing area of interest for the firm. For example, Agora, a startup that has built a materials management platform for contractors, last August raised $33 million in a Series B round of funding led by Tiger Global Management.
RenoRun CEO Eamonn O’Rourke declined to reveal hard revenue figures but noted that the company has “grown at least 3x each year since its inception in 2017 and will continue to do so.” He added that it has served more than 10,000 customers and that its employee count is up 10x to 500 from 50 in 2019.
O’Rourke came up with the idea for RenoRun after working for two decades in the construction industry in Ireland, Australia and eventually Canada. That experience led to the realization of the need for “fast material delivery.”
The startup’s mission is simple: to help contractors be more efficient by “planning, sourcing and delivering” building supplies on demand and “with greater predictability and dependability.” The company works with a variety of manufacturers, distributors, suppliers and brands so that it can supply “thousands” of building materials and supplies to contractors — from lumber, drywall, insulation, shingles and siding to hardware, doors and paint. The premise is that the contractors are more likely to have the supplies they need to perform a job and thus, less likely to have the project delayed due to a supply shortage. They also don’t have to pay employees to do things like go buy supplies so they can thus focus on the actual construction.
Another benefit of its offering, the company says, is that it gives contractors a way to manage material orders across multiple job sites so they don’t have to deal with several different vendors.
There is no doubt that global supply chain constraints and delays in construction materials have made it harder for residential remodelers, commercial home builders and general contractors to perform their jobs on time. With its new capital, RenoRun plans to use its new capital to expand across six markets in Canada and the U.S.: Boston, Chicago, Philadelphia, Toronto, Montreal and Washington, D.C., as well as move into additional markets. The company also plans to boost its headcount.
On the product side, RenoRun will expand services for new and existing customers, including a “buy now, pay later” option.
“Contractors often have multiple projects at once, and credit cards fill up quickly,” O’Rourke told TechCrunch. “With this new ‘buy now, pay later,’ feature we’ll be offering flexible payment terms so contractors can order more materials and not worry about payment right away.”
Like so many other businesses, RenoRun saw a surge of growth during the pandemic, as customers were drawn to contactless delivery options and being able to avoid long lines at traditional big box suppliers, O’Rourke added.
For his part, Tiger Global partner Griffin Schroeder said in a written statement that his firm was drawn to invest in the company because of its view that “RenoRun has streamlined the supply chain for builders and created a more efficient purchasing and delivery platform.”
Early investor Maple VC founder Andre Charoo noted that at the time his firm first invested in RenoRun, it was at the seed stage. At that time, he said, the startup was already “on track to becoming the largest purchaser for Home Depot in Canada with only operations in Montreal and Toronto — all within their first 18 months.”
He also believes that the company is helping solve a massive problem of construction productivity, which he estimates has fallen by half since the 1960s.
Also, Charoo added, “there is a huge labor shortage combined with a massive market underserved by e-commerce that positions RenoRun’s vertically integrated approach to help fill the gap.”
He also likened the startup’s subscription offering to an “Amazon Prime for contractors.”
As supply chain-related shortages continue and demand for construction projects continues to grow, it seems that RenoRun is well-positioned for success.
Source: New feed