SoftBank Still Looking to Invest in Construction Startup EquipmentShare

EquipmentShare, based out of Missouri is in talks to raise at least $150 million in new funding which is being led by SoftBank, according to Forbes. 

It is believed that the next round could give the construction tech startup a valuation of at least $1.5 billion which would increase their total fundraising to around $220 million.

SoftBank is considered one of the favorites to lead the investment process even though the deal has not been signed and the terms, along with being a lead investor, could still change or even fall through. 

Good news, one offer has been made at a valuation of $1.7 billion post-money, according to documents but it is not determined whether the offer came from SoftBank. 

Reports show EquipmentShare has raised approximately $70 million from backers including Insight Venture Partners, Great Oaks Venture Capital, and Romulus Capital which has been previously valued around $400 million, according to PitchBook. At this time, SoftBank has declined any comment.

Numbers Not Clear

William Schlacks, president and co-founder of EquipmentShare sent out a statement that said the information is fairly inaccurate but declined further comments. 

The investment in EquipmentShare would be smaller than the checks written by SoftBank's Vision Fund and the $100 billion fund launched by billionaire Masayoshi Son, in 2017, quickly made waves in the tech and financial sectors for issuing billion-dollar checks to high-growth startups.

The losses impacted by WeWork's IPO and drop in private valuation along with Uber's disappointing stock performance led SoftBank posting its largest-ever quarterly loss in November. 

SoftBank supposedly contacted portfolio companies urging them to trim their costs and pursue profits in the weeks since WeWork's collapse. Recently, a second fundraised a smaller $2 billion first close, is expected to follow a more cautious approach.

This year EquipmentShare seems to be on target raising $300 million in revenue according to information on $150 million in EBITDA profits which measure the earnings minus accounting, taxes, and financing expenses. 

Achieving healthy operating profits is important to GAAP financial which could represent a new breed for SoftBank which has been harmed by Uber and WeWork with both losing more than $1 billion last quarter and are far from generating EBITDA profit.

EquipmentShare has quintupled its sales over this past year and is expected to double its revenue in 2020, according to reports.

If SoftBank leads the deal, the investment would signal that some startup founders are not running away from association with Vision Fund, despite their recent negative publicity. Some remain intrigued by Vision Fund for the long-term vision and business contacts.

Often referred to as the Airbnb of construction equipment, EquipmentShare helps construction companies rent everything from aerial lifts and diggers to power tools and signs. 

The company has 17 rental facilities in the U.S and in New Zealand, according to its website. They also sell tracking software that monitors the equipment's engines so employees can receive alerts regarding which machines are running low on fuel or how safe a driver is operating the equipment.

EquipmentShare was founded in 2014 by two brothers, William and Jabbok Schlacks, along with three other co-founders. 

As contractors themselves, they often faced the frustration of having to source equipment for their projects and debated between purchasing a machine (that will only be used a few times a year but still be responsible for maintenance and upkeep) or renting the equipment for a rather hefty fee.

Their solution, forming a marketplace for renting these tools. This moved up from the famous accelerator Y Combinator in 2015. Schlacks said they have pivoted quite a few times but it was not really an original idea that moves us forward, it was an original path.