Tobly

Early Stage

An online platform modernizing the equipment rental industry.

Analytics

Raised to Date: Raised: $0

Aggregate Commitments $

Platform

SeedInvest

Start Date

11/09/2018

Close Date

12/21/2018

Min. Goal

$25,000

Max. Goal

$1,000,000

Min. Investment

$1,000

Security Type

Convertible Note

Funding Type

RegCF / RegD 506(c)

Valuation Cap

$5,000,000

Discount Rate

0%

Rolling Commitments $

Status
Not Funded
Reporting Date

12/23/2018

Days Remaining
Not Funded
% of Min. Goal

0%

% of Max. Goal

0%

Likelihood of Max
Not Funded
Avg. Daily Raise

$0

Momentum
Not Funded
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Location

New York, New York

Industry

Real Estate & Construction

Tech Sector

Tobly is an online platform that’s help modernize the equipment rental industry. With Tobly’s web app, people can access real-time competitive pricing, book online, and see rental lifecycle management and reporting. So far, Tobly has processed nearly $1M in equipment rentals from over 300 customers, and notable customers include HBO, Paintzen, Global Facilities Management. FirstRock Capital, David S. Rose of AREA Accelerator (also of New York Angels, Singularity University and Gust), and Green Egg Ventures are all investors, and Tobly has supply partnerships established with United Rentals, Sunbelt Rentals, and Herc Rentals, as well as hundreds of local and regional suppliers.
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Analyst Report Analyst Report Methodology Article

Summary

Amount raised: $74,000 as of December 11th

The Tobly team has been selected as a “Deal To Watch” by KingsCrowd. This distinction is reserved for deals selected into the top 10-20% of our deal diligence funnel. If you have questions regarding our deal diligence and selection methodology please reach out to hello@kingscrowd.com.

Problem

The market for rental construction equipment is riddled with inefficiencies. A couple of years ago I was studying the rental market for large road plates (you know the big steel ones that cover holes in the road and sidewalk during construction?).

 What I learned during that market study is that the equipment rental market is one that is still largely fragmented and dominated by mom and pop shops like Joe’s Rentals and Ann’s Equipment Rentals.

Needless to say, when it comes to conducting large scale construction projects, the management of equipment rental vendors can be a painful, inefficient, and slow process riddled with inefficient information, especially regarding pricing and availability of equipment.

 Managers of construction projects who are looking to rent access platforms such as scissor lifts, boom lifts and fork lifts are forced to navigate a host of different rental services and reach out to several people just to obtain information that may or may not be up to date. 

Then, they have to endure the cumbersome process of corresponding with the rental company to secure the equipment rental. This process also comes to the detriment of the rental companies that could benefit from a more efficient way to connect with prospective customers in order to increase their sales turnover and even optimize their equipment inventory.

In a modern age where anyone with a smartphone can easily rent a home or car directly from an owner, it’s clear that the market for rental equipment is lagging behind and can be much improved.

Solution

Tobly Inc. tackles the unnecessary complexity in the equipment rental process for both buyers and sellers by providing a marketplace for them to transact with transparency.

All of the fragmentation and friction currently experienced by customers in the market can be minimized by making the market transparent and easy to access via one optimized platform.

On Tobly’s website, customers looking to rent forklifts and other access equipment can see availability, equipment descriptions and even pricing quotes for daily, weekly and monthly rentals.  

Customers can access availability information by selecting rental start dates on a drop-down calendar menu feature, and they can even opt to either pick up the equipment themselves or request that their rentals be delivered.

Tobly’s platform also facilitates an efficient exchange of payment so that suppliers can access relevant customer info upfront and customers can confirm their bookings quickly.

Market Opportunity

Currently, Tobly serves customers in New York, specifically in Manhattan, Brooklyn, Bronx, Queens and Staten Island, in addition to some metropolitan areas in Miami and Los Angeles.

The market has clear prospects for growth, as the U.S. equipment rental market is $50B and has been on track for a 6.1% CAGR from 2017 to 2021.

The access platforms market represents a large share of the equipment rental market, as it was $9B in 2017 and is on track to grow at 4% by the end of 2018.

North America has the biggest market for both equipment rental and access platforms in the world. Moreover, the broader U.S. construction industry has benefited from tailwinds coming from recent tax cuts.  

The recent fiscal stimulus could have both short-term and long-term implications for companies like Tobly, as increased consumer spending and capital investment ultimately add to a positive landscape for equipment manufacturers and renters.

It’s important to note, however, that construction and housing industries are also closely linked to the health of the overall economy. With a tight labor market leading producers to anticipate increased wage costs and a steady rise in interest rates over the course of 2018 making financing in construction projects more costly, Tobly’s market may face some modest future headwinds.  

Other factors like possible rising energy prices could also have implications for the company’s prospects, as increase in energy prices could spark increased investments from energy companies, who make up a portion of construction equipment customers.  

Regardless of these market uncertainties, in an industry fraught with so many inefficiencies there is much room to run and expand even in a mildly declining market.

Business Model Validity

Tobly is positioned to capitalize on the current inefficiencies within the equipment rental market by using a well designed website and mobile first approach to facilitate transactions between buyers and sellers much more quickly and efficiently than the traditional method of gathering information and navigating correspondence in order to secure a deal.  

Customers simply find the equipment they need and book online, paying upfront and in full with credit card. Tobly then assigns the deal to one of its preferred suppliers for them to fulfill. As a result, suppliers are incentivized to offer Tobly discounted rates, allowing them to keep a percentage of the transaction’s final price.  

Tobly has been targeting customers in the equipment rental market with a high need for rental equipment, like retail facilities, mid-market construction and video production. Both facility managers and smaller trade contractors typically have a need for both scheduled and emergency rentals, making them attractive target customers for Tobly.  

In the video production segment, customers rent lift equipment specifically for stage setup and lighting. Across these target segments, Tobly has acquired some key customers like HBO and Paintzen, in addition to renting equipment to job sites for retailers like Whole Foods, Apple and Uniqlo.

On the supply side, Tobly has targeted a diverse array of suppliers across the equipment rental industry. Currently, the market is dominated by 5 companies that take 25% of the market. The most targeted suppliers that

Tobly targets for its platform are the companies that fall on the opposite end of the spectrum, of which there are over 1500. These suppliers are small and fragmented, but together they represent 55% of the market. Their decentralization makes them attractive suppliers for Tobly’s platform, as it allows Tobly to better reach a broader range of customers.

This technology-enhanced market model has enabled Tobly to operate with 30% gross profit margins, after facing an average customer acquisition cost of $360 and an average transaction generating $1,405 in revenue, with a LTV to CAC ratio of 7x leaving them in a strong position to scale quickly.

As a result, the company has its sights set on extending its business model across more metropolitan areas across the U.S., in addition to expanding into new product lines and ramping up marketing efforts through digital marketing platforms and trade shows.  

The company also has the potential to expand to reach new types of customers across other industries, like residential construction, energy companies and hospitals, among many others.

Company Founder & Background

Pablo Carvallo, co-founder and CEO of Tobly, has background working in real estate and sustainability development in Shanghai and was a fellow in the New York-based Startup Leadership Program.

Tanausu Gonzalez, co-founder and CTO of Tobly, brings technical experience to the company from his background working as a software engineer and Android developer before joining the company.

Competitive Advantage 

While the broader market for equipment rental suppliers has many players, with 55% of the market going to 50 companies and the rest of the market diffusing across a number of fragmented small to medium sized suppliers, the competitive landscape for companies strategically positioned like Tobly is less saturated.  

Unlike other companies in the broader equipment rental market, Tobly does not own any of the equipment that its customers rent and is solely an online marketplace. As a result, the key assets of the company lie in its technology, while it does not have to bear the risks associated with owning physical inventory and equipment like its competitors.  

In general, companies in the equipment rental space are positioned across two key dimensions: type of assets and range of product offerings. There are two key companies, Dozr (Canada based) and BigRentz that do something similar in this space. However, they have less specialization and are more general marketplaces for all equipment.

Even with two other early stage competitors, this is a large enough market to sustain a sizeable business even competition. Tobly, differentiate themselves by focusing on technology and maintaining a narrow scope (geographic and product offerings) to deliver a modern and simple customer experience and alleviate unnecessary complexity.

The Terms  

Looking at Dozr, which raised $2.5M in US dollars in a seed round in 2016, we could surmise that it’s seed investor recieved around ⅓ of the company’s equity, pegging the valuation somewhere near $7.5M.

The team touted ~2K customers at the time, while Tobly has about 300 customers currently at a $5M valuation cap. We think this is within reason and still presents an attractive entry point for investors.

As we think about acquisition candidates for Tobly, you can imagine a company such as United Rental, which is one of the five companies in the rental market that are actually sophisticated looking to acquire Tobly for its customer base and tech if they prove out the model.

In recent years United Rentals has acquired over 14+ companies including another rental firm in September 2018 for $2.1B. Point being, there are large conglomerates in this space with money to spend on acquisitions.

Rating

Tobly presents a really attractive investment. With an experienced team in the industry, a large nascent market, solid early traction and attractive exit opportunities.

Our one large concern that prevents a Top Deal rating is the fact that getting an old school industry to adopt high flying tech and change the way they sell and manage customers is a tough one.

Both competitors have not gone on to raise large sums of money. It seems Dozr has about 200 employees, which is a positive sign of a sizeable business, but can it be massive? And are there market conditions that will prevent mass scale and adoption? We are not certain, but it is absolutely a risk to consider before investing.  

Regardless, we think this is a Deal To Watch and worth considering as a part of your portfolio.

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Tobly on SeedInvest
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Platform: SeedInvest
Security Type: Convertible Note
Valuation: $5,000,000

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