Dive Brief:
- At a time when renting heavy equipment becomes more popular and more practical, Yard Club Inc., a San Francisco-based startup is matching construction companies and contractors with the heavy machinery they need to use, but do not necessarily want to own. Equipment rental is a $40 billion a year industry.
- Caterpillar Inc., with its healthy supply of dealers who also provide rental services, is investing in Yard Club. Caterpillar is also directing its dealers to make equipment available for rental through the startup.
- Yard Club garnered $1.6 million of venture capital two years ago. Details about Caterpillar's contributions are not public. The company is planning to expand to other parts of North America.
Dive Insight:
The sharing economy trend continues to build. Last year, 54% of the U.S. building equipment was owned by rental companies. EquipmentShare, started by two brothers in the Midwest, allows contractors to rent machinery for use on projects or rent out idle machinery they own. With the current construction outlook clouded by a variety of indicators, renting lessens the need, particularly for smaller businesses, to invest in heavy equipment that might be used occasionally. For equipment companies, renting brings in a revenue stream, but it could also eat into the core business of selling products.
"If it's disrupting their core business, they can at least invest in what is disrupting it," Scott Strawn at market research firm IDC said. "It's better to embrace those changes than try to repel them because if they don't embrace them, they'll likely find themselves left behind."
