Photo by Kari Rene Hall — LA Times via Getty Images
By Leena Rao
April 7, 2016

These days, you can hire people to deliver your food, laundry, and even park your car by merely tapping a button on your mobile phone. Clutter, a three-year-old startup, is focusing on yet another part of the so-called on-demand economy—the $30 billion market for storing household items like extra furniture, old paperwork, and boxes of clothes.

Renting storage units from businesses like Public Storage and Extra Space Storage is routine for people who have too much stuff. To lug the heaviest items inside, they must often hire movers.

Silicon Valley investment firm Sequoia Capital is betting big that Clutter will change this reality, which has largely remained unchanged for decades. The firm is putting $20 million in Series B funding into Clutter, only six months after it led that company’s $9 million Series A funding.

Brian Thomas and Ari Mir founded Clutter in 2013 under the theory that it would be more efficient for people to store personal items in warehouses rather than individual units. Their service will pick up any items, including furniture, pack them, and then store them in Clutter’s warehouses.

Clutter photographs and catalogs everything it stores to help customers when they need to have items retrieved. In such cases, Clutter’s workers pick the items from storage and deliver them to customers on their doorsteps.

Clutter says it reunites owner with their belongings within 48 hours of the initial request. Customers don’t pay for extra for deliveries and packing because it is included in the overall rental bill. Rental prices average $150 to $250 per month, said Mir.

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But Clutter is different in how is operates as a business from typical self-storage companies. Instead of paying for massive warehouses in the middle of cities, Clutter saves money by leasing small areas in established warehouses from industrial manufacturers like coffee companies, Mir explained.

Clutter also saves money by leasing warehouse space 20 to 30 miles outside of metropolitan areas rather than in city centers. Currently, the company’s service is available in Southern California, the San Francisco Bay Area, and in Greater New York.

Cluttler, which is based in Los Angeles, plans to use the new investment funds to expand to new cities, Mir said.

Clutter faces competition from the established self storage giants like Public Storage as well as startups such as Omni. Other the self-storage market include Roost, Makespace, and Livible.

Mir told Fortune that Clutter is one of the few on-demand startups that actually turns a profit on each customer it serves. However, Clutter is not yet profitable overall, he acknowledged.

For the past year, revenue has been growing 35% month over month, Mir said. He declined to reveal exact revenue numbers.

Investors are increasingly skeptical about on-demand startups and their ability to make money. They are labor-intensive operations that require huge up front costs and often face intense competition from established players.

While Clutter was able to close its round of funding in a matter of days, Mir said he could tell that the perception by investors of on-demand startups had changed. He said that while Clutter’s valuation was a healthy jump from it’s past round, he would hear from other VCs that many on-demand startups had rounds in which their valuations remained flat or declined.

“I can feel the chill,” said Mir.

 

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