Machinery Partner, a company offering novel procurement, financing and support for small businesses needing heavy machinery, today announced the close of a $4.5 million Series Seed round. The oversubscribed round was led by One Way Ventures (from Boston and focused on backing immigrant founders) and Euclid Ventures (from the West Coast and focused on B2B marketplaces), with participation from PJC and Techstars Ventures. Funding will be used to accelerate sales as well as technology development for the already-profitable company.
The round also included prominent angel investors including early Uber employees, dozens of founders of Venture backed companies, and Nicole Glaros, the Chief Investment Strategy Officer of Techstars. Notably, One Way and Euclid wrote the largest checks in the history of their respective funds.
Machinery Partner aims to disrupt the $200 billion global heavy equipment industry by offering a unique, direct-to-customer model for financing and service. By eliminating dealers and other middlemen, Machinery Partner is able to pass along double-digit savings. And because Machinery Partner rates risk according to the business and its potential, rather than the credit score or asset base of the applicant, small and new businesses can now obtain the equipment needed to grow their business and compete with bigger players.
“To say the current equipment procurement model for small business is broken would be an understatement. In fact, it’s rigged against them,” said Ciaran Gillen, co-founder and CEO. “From dealer networks, to service practices, to leasing and financing – everything is harder, costlier and less efficient for the small businesses that are the backbone of the economy. We are on a mission to democratize access to heavy equipment for these small and emerging businesses in the US and around the world.”
Founded in Ireland by Ciaran Gillen, a veteran of selling heavy equipment in global markets, Machinery Partner relocated to Boston to be part of the Techstars accelerator program. Before the dust had settled, then-Techstars Boston Managing Director Clement Cazalot left the company to invest and join Machinery Partner as co-founder and Chief Operating Officer along with long-time entrepreneur, investor and former Zipcar Executive Matt Malloy as Chief Marketing Officer.
“The team at Machinery Partner has tapped into a huge market – perhaps the last one yet to be disrupted by technology and innovation – and is poised to empower thousands of small businesses to achieve their goals,” said Semyon Dukach, founder and General Partner of One Way Ventures. “Their approach removes the inefficiencies, unfair biases and inside-dealing of this industry – the very definition of disruption.”
Machinery Partner’s model includes innovation across the lifecycle, including procurement, financing and service.
Procurement. In the traditional model for procurement, a business goes to a physical dealer and ultimately must choose based on what they have on the lot, or what they sell. This often leads to purchasing equipment that may not be best suited for the task, or one that is costlier because it’s the only one in town. Machinery Partner’s direct-to-customer approach offers a nearly unlimited spectrum of equipment and consultation with experts in the field who recommend the right equipment.
Financing. Traditionally, small businesses are risk-rated for a loan based on their assets and/or their credit history, meaning they have to bet literally everything they own to pursue their dream. Machinery Partner risk rates each loan based on a more holistic look, including the potential of the business, competitive threats, experience of the owner, and depreciation value of the equipment financed. As a result, Machinery Partner is able to make smarter bets and borrowers have reduced loan amounts.
Service. While the connectivity revolution of automobiles has not quite extended to heavy equipment, it is now possible through sensors and on-board telematics to derive critical insights about performance, maintenance and alerts. Machinery Partner is developing a web-based platform that will provide customers a data dashboard to help ensure optimal performance of the equipment.
“Are we a bank? Yes. Are we selling new industrial equipment? Yes. Are we a data analytics company? Yes,” said Cazalot. “The fact is, we need to be all three to be able to make our innovative business model work and to overcome the historical inefficiencies of the market.”
“As a small business owner I’ve personally experienced the pain points of acquiring expensive equipment,” added Malloy. “As an entrepreneur and digital marketer I’ve seen first-hand how technology and innovative business models can solve big problems and create big opportunities for customers.”
Machinery Partner’s entry market can best be described as “companies in the business of breaking rocks.” The company sells and serves a wide variety of crushers, screeners, conveyors, feeders and breakers. The average customer purchases between one and four pieces of equipment at an average sale between $100,000 and $1 million. The company expects to expand its model to other use cases and industries defined by heavy equipment needs.
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