Most of us will never be in the market to buy or sell a moderately used welder’s cart, engine lathe, or 40-ton hydraulic jack.
If we were, however, we’d likely encounter a corner of the industrial supply chain rife with inefficiency and waste–the kind of area that could use a startup’s fresh perspective for reinvention.
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That, at least, is the impression one gets from a conversation with Jamil Rahman, founder and CEO of Aucto, a startup marketplace for buying and selling used industrial assets. The company disclosed that it has raised $3.7 million in startup funding from venture firm NFX, the largest venture stakeholder, along with Motivate Venture Capital and individual investor Jack Greco.
The company runs online auctions for portfolios of industrial assets, with a particular focus on manufacturing equipment. It markets its platform to government and private sellers looking to market to both domestic and international buyers.
“There needs to be a better way for large organizations to sell these assets that still have a lot of lifespan left,” said Rahman, who spun Aucto out of his last venture, an Ontario company called NRI Industrial, in 2018. Aucto was previously based in Buffalo, but Rahman is currently working to scale the venture from San Francisco, where he recently relocated.
Like many startups, Rahman sees his sector was impacted heavily by the pandemic, pointing to three factors in particular. First, economic disruptions caused organizations to look for ways to generate capital quickly, motivating many to turn to asset sales.
Secondly, while companies were looking to sell assets during the pandemic, a historically popular form of sales–the live auction–was increasingly not an option, creating heightened interest in online auctions.
Third, the pandemic famously precipitated all kinds of supply chain disruptions. That pushed more businesses to the used marketplace for assets that were too difficult or costly to source new.
Beyond pandemic-related impacts, Rahman sees other tailwinds impacting the industrial equipment space. One is the ongoing shift in the auto industry and elsewhere away from fossil fuels and toward electrification. Equipment from coal plants and other shrinking industrial subsectors can often be repurposed or redeployed in other areas.
To date, Aucto says it has moved around $40 million on the platform, posting roughly 5x revenue growth during the pandemic. Commonly, assets are shipped internationally.
It’s a tiny piece of a vast market. In 2019, the last full-year estimate, U.S. non-farm businesses spent around $1.15 trillion on equipment, per the U.S. Census Bureau. Eventually, much of that will wind up back on the market as used equipment.
Illustration: Li-Anne Dias
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