Second Closet, a Toronto-based startup specializing in valet self-storage services, has raised $20 million in equity financing, which it’ll use to expand its employee base and shift away from consumer-based services to a third-party logistics model. The business-to-business approach comprises e-commerce and retail fulfillment, including storage and shipping, as well as physical storage for files and business assets. The Series-A round was co-led by new investor Intact Ventures and legacy investor Whitecap Venture Partners, along with several other return investors, according to the source.
Second Closet had been moving away from its valet-storage and delivery model for the last 18 months to focus on fulfillment and last-mile logistics for businesses in Canada. Though the company will use the infrastructure it built after launching in 2017, including nine facilities across Ottawa, Montreal, Toronto and Vancouver, its new focus will involve a name change and new branding, the source reported. Second Closet has stopped accepting new customers under its valet-storage model, but will continue to serve existing customers.
Part of the impetus for the change was an opportunity to enter a sector with a higher financial ceiling, one that also had unmet needs exacerbated by the coronavirus pandemic. While Second Closet views the self-storage industry as a $4 billion opportunity in Canada, it values the global third-party logistics market at more than $8 trillion, according to the source.
Second Closet expects revenue to increase fourfold this year. To meet growth, its employee base grew from 75 in late 2019 to around 450. It expects its workforce to be about 600 employees by the end of April, the source reported. In addition to adding personnel, the company will also use the new investment to expand its physical footprint.
The capital infusion follows a $13 million funding round in 2019. Whitecap was among the investors in the earlier fundraising, which included a seat on the Second Closet board of directors. Whitecap encouraged Second Closet to explore third-party logistics as a path toward business growth, according to the source.