Real Estate
Read the 19-page pitch deck an online construction-parts marketplace trying to compete with Amazon used to raise millions
subscribers.
Become an Insider
and start reading now.
Have an account? .
- Property technology startup Gearflow has created a marketplace for construction equipment parts.
- The company believes broken equipment leads to decreased productivity at construction sites.
- CMO Ben Preston walked Insider through the pitch deck the company used to raise its seed round.
Construction productivity hasn’t budged in the last 30 years.
Digitization brought by property technology, or proptech, companies has completely transformed the process of buying, selling, financing, and closing on a home. But the amount of time construction workers spend on a project results in the same amount of building — or even less — than it did three decades ago.Venture capital and startup founders are paying attention: Some new, well-funded firms are transforming the way we put up new buildings, while others are creating tech tools that monitor construction sites to catch issues or project-manage massive commercial complexes.
subscribers.
Become an Insider
and start reading now.
Have an account? .
Now construction-parts marketplace Gearflow is targeting an unlikely suspect in the name of boosting construction productivity: replacement components for heavy equipment like cranes and bulldozers.
“In the context of construction, contractors need their equipment to get their jobs done,” Ben Preston, Gearflow’s chief marketing officer, told Insider.”When it breaks down, that leads to downtime on the job, which is their single largest cost.”
A broken piece of equipment costs a contractor an average of $350 an hour, Preston said, but a broken crane on a massive commercial construction site could lead to a $1 million-an-hour loss.
Right now, contractors have to call different local equipment dealers and search sites like eBay and Amazon to see if anyone sells the right part. Gearflow, on the other hand, partners with networks of suppliers and dealers to create a marketplace that connects vendors selling equipment directly with contractors who need parts. It taps directly into the suppliers’ own inventory, and ships the parts — often for free — to the contractors, taking a cut of slightly less than 10% of the order as its own revenue.
By partnering with sellers already in business, Gearflow avoids the expensive and challenging process of setting up a centralized supply-chain business from scratch.
The company’s main competition in the digital equipment-parts marketplace is the e-commerce giants eBay and Amazon.
Amazon’s history of creating generic, private brands of its own whose items rival those of existing manufacturers can spook vendors, according to Preston. Amazon has already launched a division of its commercial-focused Amazon Business label to try and meet the manufacturing, repair, and operating supplies needs of industrial and construction businesses.
“We know Amazon is coming for construction,” Preston said. “There is a drum being beat.”
Preston added that suppliers take this as a sign that Amazon may be looking to compete with them, which can drive them to work with Gearflow as an alternate e-commerce platform designed by and for the construction industry.
Gearflow recently raised a $3 million seed round led by Watchfire Ventures, with additional funding from Newark Venture Partners, Liquid2 Ventures, Path Ventures, and Harvard Business School Angels. The company also received a strategic investment from massive construction equipment and vehicle manufacturer CNH Industrial to onboard their own dealers onto Gearflow.
The partnership with CNH is just one example of how existing construction-industry giants are using Gearflow’s digital platform to compete against a behemoth like Amazon.
Preston walked us through the pitch deck that Gearflow used to raise its seed round.
Gearflow is specifically aimed to fill the needs of contractors and subcontractors in the construction industry.
Gearflow
Equipment from cranes to bulldozers is essential for construction.
Gearflow
One customer told Gearflow that a broken crane cost his firm $1 million an hour. The project timeline had to be pushed back, but the expenses continued to pile up.
Gearflow
Another customer explained how it had to drive for hours to pick up replacement parts — after waiting on hold to find out if the supplier had the correct part in the first place.
Gearflow
Right now, many parts are traded over the phone, with no visibility into a dealer or supplier’s inventory.
Gearflow
Gearflow believes that these equipment-driven delays are a key reason why US construction productivity lags the rest of the economy.
Gearflow
The startup touts its transparency, which differentiates it from older parts-buying models.
Gearflow
The quote at the top of this slide comes from a customer, who compared their experience buying parts off of Amazon and having to return them to Gearflow’s more user-friendly model.
Gearflow
Gearflow sees itself as standing alone in its category, competing either against older business models or larger conglomerates that work in across industries.
Gearflow
Some of this slide’s text has been redacted because it has proprietary data, but the gist is that the company grew six times year-over-year from the second quarter of 2020.
The growth largely came from inbound leads from search engine optimization (SEO) for part names, which means that when contractors search for part names in Google or another search engine, Gearflow’s marketplace comes up high in the search results.
Gearflow
The company is also seeing some busy contractors return over and over again, a group that generates recurring revenue for the company.
Gearflow
This slide shows how the company’s strategy of low costs and search engine optimization have made huge impacts.
Gearflow
The company is also focused entirely on construction, which they’ve found to be a major advantage for attracting suppliers.
Gearflow
The company is focused on small- and medium-sized contractors that don’t already have dedicated teams that track down missing and broken equipment parts.
Gearflow
The company’s long-term plan is to integrate further into suppliers’ businesses. Instead of disrupting, they want to digitize the industry.
Gearflow
The company’s goal with this funding round is to lure contractors that buy most of their parts through the company, creating a sustainable customer base.
Gearflow
The company’s leaders have a mix of construction and equipment industry expertise, marketing and SEO experience, and the technical experience.
Gearflow
This slide summarizes the company’s value proposition to investors, mixing two classic startup tropes. There’s a demand for change among customers who need a product, and Gearflow has the right team for the job.
Gearflow
Preston told Insider that once investors understood the depth of the problem, they were eager to invest.
Gearflow