Clutter cofounders Ari Mir, chief executive, (left) and Brian Thomas, chief people officer.ETHAN PINES FOR FORBES
Four-year-old storage company Clutter announced Wednesday that is has closed a $200 million funding round led by SoftBank’s Vision Fund. The investment brings Clutter’s total funding to $297 million—more funding than every other on-demand storage startup combined—at a $600 million valuation.
Clutter plans to use the money to expand beyond the eight markets where its on-demand storage services are currently available. For 2019 the Los Angeles-based company is targeting three new cities: Philadelphia; Portland, Oregon; and Sacramento, California.
Since at least 2017, CEO and founder Ari Mir has said his plan is to be in 50 global markets by 2023. However, little progress has been made on that goal since Clutter’s last funding round in June of that year.
“Ultimately our goal is to service as many customers as possible,” says Mir. “We can choose to either launch new markets or expand exiting markets. In the short term we have chosen to expand existing markets. We’ve now shifted to launching new markets as well.” Clutter uses close to 2 million square feet of warehouse space, up more than fivefold since 2017.
SoftBank’s bet on the company has the potential to separate Clutter from its many competitors in a capital-intensive business. The $100 billion fund has led game-changing investments in other real estate startups like WeWork, Opendoor and Compass. While Mir says no partnerships are in the works yet, it’s easy to imagine someone who sells their home online to Opendoor needing a place to put their stuff.
Clutter has 500 employees, nearly 2 million square feet of warehouse space and a fleet of over 200 trucks.Clutter
Storage is a $38 billion revenue industry dominated by massive incumbents like Public Storage, which was founded in 1972 and has a $36 billion market cap. According to Clutter, about one in ten American households already pays for a personal storage unit, and there are more self-storage facilities in the U.S. than Starbucks and McDonald’s locations combined. Clutter and other relative newcomers like MakeSpace and Closetbox argue the traditional customer experience is lousy and the business economics are inefficient.
The biggest change is that Clutter comes to you. Movers digitally catalog what you are sending, pack it up and drive it to one of eight Clutter-operated facilities. The company doesn’t give customers a defined storage unit, but if you live in downtown Los Angeles, for instance, it will store as much stuff as will fit in a 5-by-5-foot space for $89 a month. Return requests are made online and can be for a single item if you wish.
Clutter lowers its real estate costs by renting warehouse space outside expensive city centers, a big contrast to storage units that pull from a radius of just a few miles and have struggled to add new product as land to build has become scarce. In the long run, Mir hopes his model lowers the price of storing your stuff and even opens up precious city land for parks or affordable housing.
“With self storage, if you want to store a sofa, you have to call up your friends and bribe them with pizza to help you on a Saturday,” Mir told Forbes in a 2017 profile. “You drive it to a facility, you return the U-Haul, take an Uber home, and your whole day is shot. With us, you just push a button.”