By James R. Hagerty
Caterpillar Inc. said it had invested in Yard Club Inc., a San
Francisco startup that helps owners of heavy equipment rent idle
machines to one another, much as Airbnb Inc. helps people find
vacant homes or apartments for short stays.
A spokeswoman for Caterpillar, which makes construction and
mining equipment, said the company had provided a bridge loan that
could be converted to equity in the future. Colin Evran, Yard
Club's 31-year-old chief executive who founded the startup in 2013,
declined to provide details of the financing but called it "pretty
substantial." Yard Club already had attracted $1.6 million of
venture capital in late 2013, he said.
Yard Club has been testing its service in the Bay Area and
currently has about 700 pieces of equipment listed for rental. Mr.
Evran said Caterpillar dealers would help spread the service to
other places.
Excavators, bulldozers and other types of equipment often sit
idle between jobs, leaving owners' capital tied up in assets that
aren't being used regularly. To avoid the costs of owning idle
equipment, more users have turned to equipment rental firms in
recent years. The American Rental Association, a trade group,
estimates that 54% of the U.S. equipment fleet is owned by rental
companies, up from around 40% a decade ago.
Caterpillar has responded to the rental trend by insisting that
its dealers set up CAT Rental Stores so they can rent as well as
sell equipment. That requires heavy spending by dealers to build up
rental fleets and exposes them to the risk of being stuck with lots
of idle equipment if the economy stalls.
Chris Gustafson, rental division manager for Caterpillar, said
the Yard Club arrangement would help owners of Caterpillar
equipment improve their return on investment, boosting customer
loyalty. He said "peer-to-peer" rentals of equipment have been done
informally for years. Yard Club offers more technology and
consistency to those arrangements, he added.
Caterpillar dealers in western Canada and Arizona should be
participating in Yard Club rentals by mid-2015, Mr. Gustafson said,
and the service then will spread to Georgia. He said these areas
would be serve as pilot projects to test the service before it
spreads elsewhere.
Yard Club will list equipment from CAT Rental Stores as well as
from individual equipment owners, Mr. Evran said.
Write to James R. Hagerty at bob.hagerty@wsj.com
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