LEHI — Utah tech startup Neighbor has more than cracked the code on how to disrupt the once-staid world of self-storage and on Wednesday announced a monster, $53 million Series B round of venture funding.
The new capital, which is among the largest Series B rounds ever for a Utah firm, brings the young company’s total funding to date to nearly $66 million and will help fuel further nationwide growth.
Neighbor co-founder and CEO Joseph Woodbury said his company hadn’t necessarily been pursuing additional funding, but the right opportunity arose from an investment world that has put Utah near the top of its list of places to watch.
“This is really exciting for us,” Woodbury said. “But truth be told, we’ve been more focused on execution than on fundraising plans.”
That changed when the chance to have a fund led by one of the country’s leading real estate tech investment firms, Los Angeles-based Fifth Wall, popped up on Neighbor’s radar.
Woodbury said his company was already getting some consulting help from the experts at Fifth Wall, but an opportunity to have them join its portfolio of investors was too good to pass up.
“Our last round (a $10 million Series A) was led by Jeff Jordan and his team at Andreessen Horowitz, probably the best marketplace investors in the country,” Woodbury said. “Now, we have the best real estate venture investor. ... It’s a perfect marriage.”
Neighbor was already in a high-growth cycle before the COVID-19 pandemic hit, but some of the conditions wrought by the public health crisis, including a new focus on clearing home space thanks to ubiquitous work-from-home responsibilities, drove increased interest.
Another pandemic-induced reality that Neighbor was well positioned for was the widespread desertion of commercial spaces. Some companies that were suddenly left with unoccupied and unused office and warehouse space saw opportunity in making those spaces available for storage via Neighbor’s peer-to-peer platform.
Over the course of the last year, Woodbury said the company has seen 10x growth in that market segment.
Neighbor was launched in 2017 by a trio of BYU grads with the goal of building something deeper than just a high-tech go-between for people with stuff to store and other people with space to spare. Neighbor co-founders say they’re not only beating their traditional mini-storage competitors on price — by half — they’re also using unique tools like machine learning and augmented reality to become the most convenient, safe and flexible storage solution there is.
In a current economy where “stimulus checks” has become a much debated term, Woodbury said he sees Neighbor as a unique pathway for people to get regular cash infusions by simply reutilizing unused space.
Woodbury said the point of the stimulus programs, first championed by former President Donald Trump and further pursued by President Joe Biden, is to get “direct cash payments into people’s bank accounts and that’s what Neighbor does, too.”
“We give all of our users stimulus checks every year and will do it for the rest of their lives if they want,” Woodbury said. “It’s not a job. You onboard your space and all of a sudden we’re giving you stimulus checks. It’s very powerful.”
Beside Neighbor’s Series B fund leader Fifth Wall Ventures, the investment group features returning investor Andreessen Horowitz with additional funding from DoorDash CEO Tony Xu and StockX CEO Scott Cutler, who will join former Uber CEO Ryan Graves and Overstock CEO Jonathan Johnson as investors and advisers to Neighbor.
Neighbor is currently operating in all 50 states and looking to elevate operations across the country with the new capital and acquire even more of the $40 billion U.S. storage market.
“With a roster of investors and advisers hailing from the world’s largest marketplace operators, including Uber, Airbnb, DoorDash and StockX, Neighbor will use this sizable investment to rapidly expand its nationwide network of hosts and renters,” Woodbury said in a statement. “Storing your personal goods in someone else’s space is rooted in trust and we’re proud to have expanded our community’s trust into tens of millions of square feet in big cities, small towns, suburbs and rural areas across all 50 states.”
The company noted that in addition to leading its funding round, Fifth Wall has facilitated opportunities for Neighbor to partner with the firm’s extensive roster of strategic limited partners, a group of more than 65 of the world’s largest owners and operators of real estate from 15 countries. Fifth Wall partners Acadia Realty Trust and Jamestown have already begun onboarding properties onto Neighbor’s platform.
Fifth Wall partner Dan Wenhold said Neighbor is a company that his firm first connected with about a year ago and the more they worked with Woodbury and his team, the more impressed they were with the business and its focus on customer experience.
“I think any business that’s building a true, two-sided marketplace where they are facilitating the transactions, you have to have the consumer in mind, always,” Wenhold said. “The sharing economy successes, Airbnb, Offerup, Uber ... each of these built consumer experiences that worked and that people returned to time and time again.
“Neighbor has done a great job at that.”
And Wenhold’s bullish stance on Neighbor extends to the whole of Utah’s tech ecosystem, which he noted has been expanding at a marvelous pace and is one Fifth Wall continues to watch with deep interest. Wenhold has participated in funding rounds, in funds separate from his firm’s primary real estate tech focus, for other Beehive State success stories including outdoor gear-for-good innovators Cotopaxi and Provo-based designer shoe and boot startup, Taft Clothing.
“These companies, like Neighbor, are run by really impressive leadership teams,” Wenhold said. “They’re focused on building consumer-first brands and care about much more than providing product. They’re very invested in their missions ... and building a family of customers.”