With $500K in Tow, Rentabilities Aims to Simplify the Cryptic Equipment Rental Space
Which Boston startup provides you one stop (rental) shopping for Disney-princess-themed bouncy castles, boats for booze cruises, and even a Zoltar fortune-telling machine just like the one from the Tom Hanks movie Big?
Founders and brothers Alex and Andy Cook got their first exposure to the equipment rental world with a consulting gig one summer in college. They helped a Boston merchant get his product catalogue—which ranged from party gear to lawn mowers—online and installed a software system for 24/7 reservations. After a few more years of similar jobs, they formed Rentabilities and entered MassChallenge in 2010 with a mission of building a “better, easier, more intuitive, rental point-of-sale system,” says Alex Cook.
The goal was to automate the rental process and prevent merchants from renting out more gear than they actually had—a big problem they’d encountered in past gigs. Ultimately, the startup wanted to create an online marketplace where consumers could search for rental options across all the different companies nearby, rather than having to shop on a piecemeal basis.
Rentabilities nabbed a $50,000 check from MassChallenge’s inaugural accelerator session and got some good traction, bringing about 30 merchants on board and earning about $5,000 per merchant. They hit just one problem, Alex Cook says. Mom-and-pop rental shops aren’t exactly the savviest of businesses when it comes to technology.
“We had the issue where the overbooking rate was still the same. Even though they purchased this system from us, when the shit hit the fan, they’d revert back to their paper or DOS system,” he says.
So, Rentabilities made the “difficult decision” in spring 2011 to stop developing and selling the online booking software directly for merchants, and instead focus completely on the consumer-facing marketplace, Cook says.
“Because we thought overbooking was a giant issue, we designed a novel way to handle it,” he says.
“You come to this site and type in what you’re looking for and where are you located. It serves you up everything available nearby,” Cook says. Consumers can book and pay for a rental on the site, and Rentabilities inserts itself more directly into the process by sending merchants an e-mail notifying them of the reservation. Merchants can confirm the rental directly from the e-mail. Rentabilities calls the merchants who don’t respond to the message after a handful of times, and takes a cut of the revenue they pass along to rental businesses.
Rentabilities still sees the roughly 400 active merchants on its platform overbooking their equipment in about 15 percent of cases on average. In half of those situations, Rentabilities can offer a substitute item, and otherwise it will contact other merchants to find comparable equipment.
“We’d still like to have it be a totally seamless system one day,” Cook says. “We’re hoping to hook into a bunch of inventory software out there, but we need significant funding to pull that off.”
As far as funding goes, after Rentabilities switched its focus to the online marketplace last spring, it started raising its seed round, which turned out to be a bear of a task, Cook says.
“It took lot longer than I anticipated—especially being located in Boston,” Cook says. “While I was fundraising, we almost decided to move to the Valley. I thought that maybe I was a complete idiot and I was terrible at raising capital.”
He attributes the challenge to the low number of angel investors that invest on their own, instead of just within angel groups, and also the reluctance of the Boston angel community to invest in first-time entrepreneurs. Rentabilities took to San Francisco-based AngelList and eventually convinced investor and HubSpot founder Dharmesh Shah to invest (he committed at 2:00 am on a Friday night). The idea attracted other angels like early Facebook employee Andrew McCollum, Punchbowl founder Matt Douglas, HipHost founder Mario Ricciardelli, and Steve Willis, a co-founder of Wellfleet Communication, Argon Networks, and Overlook.
“We got some pretty incredible support from Ryan Moore at Atlas Venture; they came in and closed up the round,” Cook says. The startup closed the majority of its seed funding in January, and pulled in a last bit this June for a total $505,314.16. Odd number, you say? Well one of the startup’s investors is really, really into the number pi, and can recite it to the thousandth digit. He wrote an extra check to make the amount come out to $505,000 plus 100 times pi. (Cook remained mum on who the Boston-based investor is. Do you have any guesses?)
Rentabilities’ big focus in the next couple of months is making better sense of all the information and options out there for consumers. It recently updated its interface to filter rental merchants by price, abundance, and reliability of the merchant. The three-person startup is also planning to raise a Series A round next spring and staff up its inside sales team.
“We’ve done a really great job with really supply and demand on the site, and a decent but not amazing job with conversions,” Cook says. “That’s our No. 1 issue. We want to be converting all our visitors into sales.”