Montreal-based RenoRun raises US$142 million in round led by Tiger Global Management

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RenoRun Inc., an e-commerce platform and delivery service for construction materials, has raised US$142 million in the fourth-largest Series B funding for a Canadian startup, the company said Wednesday.

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The round was led by Tiger Global Management, a New York investment firm that helped numerous companies go to market in the United States last year and is known for placing early bets on the likes of Meta Platforms Inc. (formerly Facebook) and Instacart Inc. New investors poured into the second funding round, including Investissement Quebec, Sozo Ventures and SE Ventures, among others. They were joined by existing investors, which include ScaleUP Ventures, Obvious Ventures, Inovia Capital, Real Ventures, Maple VC and Silicon Valley Bank. It will bring on executives from GGV, Opendoor, Sonder and founders of GoodFood as strategic investors.

“We put our heads down and we’ve been running as fast as we can for the past five years,” co-founder and chief executive Eamonn O’Rourke said in an interview. “To bring on partners like Tiger Global and Sozo Ventures for a Series B definitely makes us very happy and gets us set up for the next evolution of the company.”

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O’Rourke created the business in 2017 after a lifelong stint in the construction and property development business. He realized all the effort contractors used up in managing numerous vendors to source various materials and all the time in travelling to pick them up was lost earning potential.

“What I saw was just the waste that I had sending skilled people to the store to go purchase materials. So when I first launched the business, it was very much a case of scratching our own itch,” he said.

His Montreal-based company created an online platform for contractors to purchase building materials such as lumber and drywall through its online website and mobile app. It also has a “pro desk” that customers can call and place orders. Once an order is placed, RenoRun delivers the order in as little as two hours and contractors can schedule deliveries in advance to the job site. The idea, he said, is to keep contractors on-site and make operations more efficient.

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RenoRun makes money in three different ways: through the materials it sells on its platform, delivery fees and a subscription service. Subscription plans range from $83 to $199, depending on the plan, and there are no minimum orders, according to the website. It also handles returns for their customers, who are primarily renovation contractors but include home builders, commercial and industrial contractors and specialty contractors such as plumbers and electricians, the co-founder said.

The company currently operates in Montreal and Toronto, and pushed into the U.S. last year, launching in Chicago, Boston and Philadelphia. With this funding announcement, it said it is expanding into Washington, D.C., a move that had been in the works prior to the raise. O’Rourke will use the money to expand his 500-person team — already up from 130 people in January 2021 — to 1,000 by the end of the year as RenoRun chases a market worth $400 billion in North America. He wouldn’t disclose revenue figures but said the company has seen 200 to 400 per cent growth year over year in established Canadian cities.

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It could be a prolific year for the e-commerce platform after the housing market benefitted from a boom during the pandemic in Canada and the U.S, but there are barriers forming more broadly in the economy. Last year, the number of housing starts in Canada rose a record 21 per cent to 244,025 while in the U.S., housing starts were up more than 15 per cent. The state of new home building in 2022 is a bit cloudy in the U.S. given Canadian duties on softwood lumber, but demand for homes in Canada is expected to run hot . RenoRun benefitted from the boost in renovations during the pandemic that pushed lumber prices high. But growing supply chain disruptions meant, like many businesses, the Montreal company didn’t get away “unscathed,” O’Rourke said.

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Rising interest rates on both sides of the border could have a cooling effect on the housing and home improvement market, but O’Rourke said he’s not too worried. “Last year in the U.S., they sold more new houses than they have in the past 15 years and the remodelling industry is directly impacted by the number of new house sales. So we don’t expect any material difference in the remodelling space” considering that’s the company’s primary user, O’Rourke said. As well, the hiring spree it went on last year to expand merchandising and supply-chain teams helped RenoRun weather bottlenecks. “We ended up being in a really, really good place to mitigate it and didn’t suffer as bad as we thought we were going to.”

In 2019, RenoRun secured US$17.1 million in a Series A funding. With the funding announced on Feb. 1, O’Rourke hopes to expand into four more cities by the end of 2022. He has set his sights on the U.S. but is “looking at” Vancouver and Calgary over the next 18 months. “Our goal is to make sure we have a flag planted in most U.S. metros within the next 24 months.”

Financial Post

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