RenoRun Inc., a fast-growing Montreal startup building an Instacart-like service to deliver construction materials to general contractors, has raised US$142-million in a private-capital financing led by global hedge fund giant Tiger Global Management.
The deal, finalized last fall but unveiled on Tuesday, was one of several investments in Canada by New York-based Tiger in 2021, before technology stocks began selling off, which observers fear could spread to private technology valuations. The financing includes more than US$100-million in equity issued by RenoRun plus other funding instruments including debt.
Other investors include U.S. venture capital firms Sozo Ventures, Fifth Wall, and Triple Point Capital, as well as digital-automation company Schneider Electric. Canadian wealth manager Nicola Wealth, Investissement Québec, BDC Capital and Export Development Canada are also involved in the financing.
Past backers also participating include ScaleUP Ventures, Obvious Ventures, Inovia Capital, Real Ventures, Maple VC and Silicon Valley Bank. “This is one of the fastest-growing revenue companies I’ve ever worked with,” said ScaleUP partner Matt Roberts.
RenoRun generates more than US$30-million in annual revenue and has served more than 15,000 contractors since launching in 2017. Chief executive officer Eamonn O’Rourke said he expects that to hit US$100-million this year as RenoRun expands from serving five North American cities (Toronto, Montreal, Boston, Philadelphia, Chicago) to 10, and moves to nearly double staff to 1,000 people.
Phil Wickham, general partner of Silicon Valley-based Sozo, said “we’re making a bet at this stage, which is still very early, that this team can make the right decisions” and rapidly grow. “If they do, this company becomes super interesting.”
RenoRun was founded in 2016 by Mr. O’Rourke, spouse Joelle Chartrand and her brother Devlin (who has since left) after the couple took a break in California the prior year from running several construction companies together in Ireland, Australia and Canada. They also have three kids under 10. “Successfully juggling family and business roles takes a lot of self-awareness and dedication” Ms. Chartrand, vice-president of culture, said in an e-mail.)
When Mr. O’Rourke saw how Instacart’s on-demand grocery delivery service worked, he thought the same model could work well for general contractors, delivering everything from screws to two-by-fours. He explained that on any job site, one worker typically visits a hardware store several times a week for materials. With workers earning C$25 to C$65 an hour, those trips are expensive and hurt productivity.
His idea was to develop a service where contractors could order materials online for delivery within a narrow time window. RenoRun charged $50 an hour, the same as wages for on-site workers to make store trips themselves and cheaper than merchants charged for deliveries.
RenoRun started in Montreal in 2017, with Mr. O’Rourke and team walking onto job sites offering free coffee and a sales pitch. “The beauty of this business is that on any residential street in almost any North American city you can see a potential client,” he said. At first the team encountered skepticism, but as he walked contractors through the math on savings “it became a very easy sell,” he said.
Demand quickly grew and RenoRun expanded to Toronto and the United States, testing the Austin, Tex., market in 2019 before leaving to focus on closer, larger cities such as Boston. “I miss them,” said Travis Smith, owner of Austin-based Hammersmith Construction and Remodeling, which used RenoRun daily during its brief time in the market. “I’d use them again” if they returned, he said. “There’s nothing like them. It saved time and money.”
Scaling up is a huge effort. RenoRun is a vertically integrated e-commerce merchant; it oversees it own logistics with branded vans and uniformed drivers and technology to handle ordering, route optimization and invoicing. It operates a vast warehouse in each market, which it stocks with nearly 20,000 items from an array of suppliers including Home Depot and Lowes. RenoRun faces local delivery rivals, including TOOLBX Inc. in Toronto, and has a 97 per cent on-time delivery rate, higher than industry standards, Mr. O’Rourke said. Gross margins are between 25 per cent and 38 per cent of revenue like others in the business, Mr. O’Rourke said.
Sozo’s Mr. Wickham said “when we first saw RenoRun we didn’t love it” as an opportunity. But he warmed to the team and was impressed by their ability to execute on plans. After expecting an indifferent response from “small, grumpy contractors” he was “bewildered” by the opposite reaction during reference checks. “We couldn’t get them off the phone. They couldn’t stop talking about this company,” Mr. Wickham said. “”We concluded the margins can be more attractive” as RenoRun grows.
Will Gonell, principal of Toronto home builder Gonell Homes, said using RenoRun has been a “no-brainer” for him. “They delivered on their promises and made life easier for us.” RenoRun now delivers a full job’s worth of materials based on blueprint plans and offers a “pro membership” service for $200 a month, giving contractors free delivery, pickups, returns and discounts on materials. Not using RenoRun, Mr. Gonell said, “would be like going back to not using a cellphone.”
RenoRun intends to increase its stock to 100,000 items per market. Whether it plans to cut out giant retailers completely from the supplier mix and buy more from wholesalers is a topic Mr. O’Rourke was reluctant to address. Mr. Wickham said RenoRun was more focused on the “all-encompassing” task of scaling up. “If they get that right they’ll figure out a way to deal with some of the other ecosystem players,” Mr. Wickham said.
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