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Airbnb-inspired startup Neighbor raises $10M to crack self-storage puzzle

As Airbnb gets ready to go public, a startup called Neighbor is looking to breathe new life into the rapidly maturing sharing economy.

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As Airbnb gets ready to go public, a startup called Neighbor is looking to breathe new life into the rapidly maturing sharing economy. The Lehi, Utah-based company, which operates a peer-to-peer self-storage platform, announced on Thursday a $10 million Series A led by Andreessen Horowitz.

In addition to the new funding, Neighbor has amassed some sharing economy bona fides. A16z managing partner Jeff Jordan, an Airbnb board member, is joining Neighbor’s board. Uber’s first CEO, Ryan Graves, is also an investor, as is former Khosla Ventures partner Nate Bosshard, who co-founded fitness startup Tonal.

On paper, the self-storage industry is ripe for disruption. Three of the largest self-storage companies—Public Storage, Extra Space Storage and CubeSmart—are collectively valued at around $60 billion. None of them have an iOS app, and only one has an Android app.

Neighbor’s big idea is to turn spare garages, basements and sheds into rentable self-storage units. It’s a personal, local alternative to hauling mounds of unused stuff to a storage facility.

The idea has been tried before: Roost launched a shared storage platform before pivoting to parking spaces; StoreAtMyHouse has operated a bare bones storage sharing platform for over a decade; and ShareSpace went out of business last year. But none of the upstarts have posed a real threat to incumbent storage companies.

“Most marketplaces fail,” Neighbor CEO Joseph Woodbury said. “It has to be at a certain scale.”

Andrew Chen, a general partner at a16z, argued in a 2018 blog post that marketplace startups don’t succeed because they struggle to attract consistent supply. What makes self-storage attractive is that there are a wealth of empty space across the US, and little labor is required to rent it out.

“There’s 1.7 billion square feet of storage built in the United States right now,” said Woodbury. “It’s taking up all this space in cities when you have excess space just sitting in people’s homes. We need a marketplace to help us allocate it efficiently.”

For those seeking extra storage, Neighbor promises a cheaper and closer-to-home alternative to the leading storage companies. It also insures hosts up to $2 million and renters up to $25,000.

Neighbor is available nationally but has focused on building its marketplace in Salt Lake City and Los Angeles, where hundreds of storage units are available. The startup, which employs 20 people, received $2.5 million in seed funding from Peak Ventures and Pelion Ventures in 2018.

Neighbor’s expansion comes at a time when the cachet of peer-to-peer marketplaces is fading. Americans’ interest in the “sharing economy” peaked in 2015, according to Google Trends, and has been on the decline ever since. Scooter- and bike-sharing startups have started to rein in their growth plans. Car-sharing efforts like LimePod, car2go and ReachNow have shut down or scaled back their operations. Uber and Lyft faced their own reality checks after debuting as public companies.

Despite the inherent challenge of marketplaces, droves of startups have attempted to adopt the model. Nearly 1,000 companies on AngelList, which develops a startup funding and networking platform, describe themselves as the “Airbnb of/for” something. Even more compare themselves to Uber.

Neighbor stands to benefit in at least one area where both Airbnb and Uber have struggled. Cities are unlikely to fight it, since the startup’s business model doesn’t run the risk of displacing affordable housing or relying on an army of contract workers.

Correction: This article has been updated to accurately describe AngelList.

Featured image via Maskot/Maskot/Getty Images

  • james-thorne.jpg
    Written by James Thorne
    James Thorne is a Seattle-based senior editor covering venture capital at PitchBook. He previously reported for GeekWire, Reuters, CNBC and Source Media. A native of Colorado, James graduated from Boston College and received his master’s degree in business journalism from New York University.
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