Update 12/18/19 – Second Closet has closed another round of funding, this time raising $13.2 million to fuel expansion to other Canadian markets next year. New locations are expected to open during the first quarter, though the company is keeping its target cities confidential. Funds will also be used to accelerate development of the technology platform, with an increased focus on customer experience, according to a source.
The Series A funding was led by Whitecap Venture Partners, with participation from existing and new investors, including Cowie Capital Partners, Dream Maker Ventures and MIG Group. In connection with the latest round of capitalization, Shayn Diamond, a partner at Whitecap, has been appointed to the Second Closet Board of Directors.
The company’s association with investors from the real estate sector, such as Cowie and Dream Maker, has helped to open doors for the business, Ang told a source. “As a small company, having to negotiate leases and hundreds of thousands of square feet, you don’t have that much credibility,” he said. “So, to have industry titans like the Cowies behind you, where they’re work can move mountains, it’s been super helpful. [Having our investors] just helps open doors. It’s up to us to walk through them, but they can certainly help to unlock it.”
During the last year, Second Closet has experienced triple-digit revenue growth while expanding its workforce to more than 70 employees, according to a press release.
“Over the past two years, Second Closet went from an idea to a solid business that is now profitable and primed for accelerated expansion,” Ang said. “We have an incredible group of investors to support us on this next phase of our growth. They each bring a tremendous amount of value to our business, and we look forward to working with them as we begin executing on our strategic plan for 2020.”
9/12/18 – Second Closet has closed another round of funding, this time raising $2.04 million to fuel expansion to Vancouver, British Columbia, Canada. The valet self-storage operator has now raised more than $2.5 million in a little more than a year. The round was led by MIG Group, along with participation from existing investors. As part of its investment, MIG will place leader Misha Goikhberg on the Second Closest Board of Directors, according to the source.
“Misha has a large real estate portfolio. Of the amount of capital he has devoted to venture investments, the majority of them are in technology companies,” Ang told the source. “If you think about it, real estate and technology couldn’t be further from each other. From the marginal costs to the growth rates, they’re radically different. So, having someone that gets both is important because Second Closet is an equilibrium of both.”
"We made a bet on Second Closet’s ability to disrupt the large vertical of self-storage,” added Goikhberg. “People will always pick convenience above all else, and this is where Second Closet’s offering is second to none. Mark and David [Ang] are very committed and hustling founders, who will build a real, big company.”
Ang believes Second Closet has proven its business model in Toronto and is eager to serve the Vancouver market. “There’s more searches per capita for storage there than in Toronto. Smaller population base, but there’s more demand,” he said. “From an economic standpoint, it commands twice the price because of the high demand and lack of supply. We think we can go in with our model and do really well. We’re not a build it and hope they come model. We want to document a ton of data on what it means to expand to new cities and get it right, and [then] rinse and repeat.”
7/17/17 – Second Closet, a startup specializing in valet self-storage services in Toronto, recently raised $500,000 in seed funding in one day. The round was led by entrepreneurial brothers Michael and Richard Hyatt, along with AJB Software founder Naresh Bangia and Mike Cowie, executive vice president in the Toronto office of real estate firm Colliers International. Second Closet launched service to the Greater Toronto market in April, according to the source.
Similar to other valet-storage operators, Second Closet uses a mobile app and online platform that allows customers to schedule item pickup, maintain a visual catalog of stored bins and bulky items, and schedule delivery of items to their home. The company charges $6-$9 per month per bin, depending on size, and $9-$27 per month for individual oversized items, though it won’t accept large furniture, according to its website. Five space plans ranging from 25 to 200 square feet are also available from $74 to $371 per month. A custom space option is also available.
To store items, Second Closet has partnered with an unidentified storage company it says has been in business for 25 years. Its facilities are climate-controlled and have 24-hour security, according to the Second Closet website. Return deliveries of bins or items are typically completed within 15 hours of the request, though rush deliveries are available for an extra fee. Customers may also pay to receive unlimited retrievals.
Second Closet CEO and co-founder Mark Ang developed the business model for the valet-storage company as a student at Creative Destruction Lab (CDL) and shared his plans with Michael Hyatt, a founding partner of CDL, to receive his feedback. “I liked him, and what you do, you bet on the person,” Hyatt told the source. “And this guy’s got it. And I like the model.”
In 2002, the Hyatt brothers co-founded BlueCat Networks, a company specializing in the automation and centralization of services related to domain name servers. BlueCat sold to Chicago-based Madison Dearborn Partners LLC in February for $400 million.
“When you invest, you have to imagine you’re married for 10 years, and why would you want to be in a bad relationship for 10 years?” Michael Hyatt said. “I ask [entrepreneurs] to show what the company would be like at $1 million a month. I wouldn’t have invested in Second Closet if I didn’t think it could get to $20 [million] or $30 million.”
Second Closet intends to use the investment funding to scale its marketing and operations. The company currently employs five people, along with 13 service vehicles. “It’s hard to keep up with operations because it’s growing so fast,” Ang told the source. “At the same time, we want to invigorate that growth.”
Sources:
Betakit, Second Closet Raises $13.2 Million to Disrupt Billion Dollar Self-Storage Market
Private Capital Journal, Second Closet Secures $13.2M Series A Led by Whitecap Venture Partners
Betakit, Second Closet Raises $2.04 Million, Plans Vancouver Expansion
Betakit, Second Closet Raises $500,000 From Hyatt Brothers for Pay-Per-Item Storage Company
Second Closet, Website
