AngelList darling MakeSpace raises $8M Series A to give New Yorkers an easier way to store their stuff
The biggest problem of living in New York is living comfortably in New York: Everything is more expensive and space is always cramped. This is doubly so when it comes to housing. The amount I paid for an apartment in Cambridge a few years back nearly doubled when I moved to the Big Apple, yet my square footage dropped a sizable percent. Mind you, I lived with roommates in both instances.
That's why many New Yorkers often resort to local storage units to save mementos they don't necessarily need directly in front of them. Yet the act of acquiring a unit as well as hauling one's stuff is a pain and, not to mention, expensive.
MakeSpace, which launched last September, claims to provide a storage solution that best works with New Yorkers' lifestyles. Today it's announcing an $8 million Series A round led by Upfront Ventures.
I first became aware of MakeSpace last January when the startup did a presentation at the New York Tech Meetup. Its pitch to the filled auditorium was that it wanted to build "a Dropbox for physical things." (Let's just note right here that when you think about it, a Dropbox for physical things is just called storage.) MakeSpace's point, however, was that it automates delivery and dropoff as well as the digital cataloging of your stuff.
Here's how it works: MakeSpace rents out storage units in remote areas near New York. Customers use its website to request a delivery person ('uploader' in its vernacular) to show up within the day and provide boxes for storage. These are standardized plastic tubs that users can fill to capacity.
Once the boxes are filled, the uploaders return to pick them up, make sure they are properly sealed, place a barcode on each to ensure correct cataloging, and then drive them to the storage units themselves (in their branded Mercedes vans, of course). Once brought to the facilities, they sit until needed. People can easily see visual documentation of their stuff using the web or an upcoming app, and request its return within a 48-hour wind0w.
Currently the company charges $25 per month for four boxes, and $29 for its delivery.
MakeSpace's co-founder and CEO Sam Rosen explained it at the Meetup as "on-demand storage." His vision, however, as he explained it to me a few months later, is that anyone living in a metro area can use MakeSpace for storage and not have to drive themselves to a unit, nor buy cardboard boxes that will probably disintegrate as time goes on. Rosen sees a possibility of buying up these more decentralized units slightly afield of cities, which are cheaper for his business, and then using them to woo more customers.
Since its launch, Rosen told me that the company now has thousands of customers in New York, with box rentals tripling month over month. This new investment will be used to build out its team. Currently the outfit runs out of a small one-floor co-working space in Chinatown, but Rosen plans to bring on a total of 30 employees by the end of the year.
MakeSpace got its initial funding from Mark Suster in the form of an entrepreneur-in-residence offer from Upfront Ventures. This gave Rosen a $100,000 check, as well as the ability to flesh out his business model with the likes of well known investors like Suster. Rosen was Upfront's first EIR, which, he admitted, made the deal fairly nebulous. The agreement, as he put it, had "basically no terms." But for that time he worked alongside the Los Angeles firm to craft a solid business model he could transport to New York.
By June of last year he was able to raise $1.3 million in seed funding from others using Suster as a catalyst. Rosen, however, decided to not close the round as the SEC rules had just changed, making it possible for people to invest online. The CEO thought he might dabble with AngelList to see if anyone would take the bait. Within two weeks of putting MakeSpace onto AngelList the company raised an additional $200,000; By the end, Rosen told me that $700,000 was added from online investors without even the use of a syndicate.
In total, with Upfront's injection, other investors, and help from AngelList, MakeSpace raised $2.1 million by December. Rosen thanks Suster for all of his initial success. "Things get accelerated when you have a good lead investor," he told me. He also believes his is the first company to use AngelList in that capacity.
The next few months will be the real test to see if MakeSpace can scale. While the service is innovative, there are more than a few storage companies in New York -- many of which have been around for decades. Rosen says that MakeSpace is already acquiring customers at half the rate of what Manhattan Mini Storage does (one of the top players in this market). It'll need to double that statistic in order to make a real dent.
While Rosen's dream is to take over the US storage space and even launch a shipping unit, his first goal is to make it work in New York. In his words, "we want to win New York." Hey, if a company can make New Yorkers not completely pissed off about about the prospect of dealing with storage shenanigans, well, it stands a chance.