Generation Start-Up: Tenderd wants contractors to stop digging around for equipment
An online marketplace for construction equipment raises $5.8m from Silicon Valley bigwigs within months of setting up
Arjun Mohan’s rise as a technology entrepreneur was several years in the making. The founder of Tenderd in Dubai, an online marketplace for construction equipment, raised $5.8 million (Dh21.3m) for his fledgling company in December last year, only six months after starting it.
Mr Mohan attracted very high-profile backers, including PayPal co-founder Peter Thiel and Tinder co-founder Justin Mateen. Before Tenderd even reached its first anniversary, the company was identified by the World Economic Forum as one of the “100 Arab start-ups shaping the Fourth Industrial Revolution”.
A lot of our team have stock options and equity in the company – very typical of a Silicon Valley-style start-up.
But this achievement came after several years of plugging away at other ventures, living in hostels and “hacker homes” in San Francisco with two university friends.
“We kind-of just bunked together and tried to figure out the start-up world,” says Mr Mohan.
Several ideas were tried, but “nothing was actually sticking” until they came up with Eureka King – a platform that helped publishers to better target their audience with relevant content, but the sales cycle for converting customers was slow, which caused cash flow issues.
One part of the platform, an artificial intelligence bot that lets customers ask direct questions using natural speech, was spun out to form a venture known as archie.ai – a company which is still run by Mr Mohan’s college friends Dmitri Tcherbadji and Ishtiaq Rahman, and in which he remains a silent partner.
However, a family emergency in August 2017 brought Mr Mohan back to the UAE, where he grew up. This eventually led to the creation of Tenderd.
“My dad was a partner in a construction business in Dubai and I noticed that business was not doing too well and construction was not doing too well. A lot of companies would rent out their idle equipment in order to generate free cash flow. That was the only way you could generate free cash flow without upfront investment - in projects, for example,” says Mr Mohan. “So I thought there was an opportunity there.”
He set up Tenderd in May 2018 to match companies with spare equipment to rent with those looking to hire. He also managed to secure a place at Y Combinator – the prestigious seed accelerator based in Google’s home city of Mountain View, California, which has backed a range of successful ventures including Airbnb, Stripe, Dropbox and Coinbase, among others.
“I told them, ‘I’m not sure if you’re in construction … here in the Middle East it’s difficult to bring technology into this space but I think there’s an opportunity’,” says Mr Mohan.
“And they had invested in a company called EquipmentShare, which was an America-based company that is a similar model to us, and they had seen that company grow to $1 billion in three and a half years.”
He spent three months with Y Combinator, refining the product before returning to Dubai where he and two new colleagues set about signing up equipment owners and potential renters.
He also kept in touch with potential funders to whom he had pitched at a Y Combinator demo day, and by December 2018 he had raised $5.6m in a seed funding round. Backers included Mr Thiel, Mr Mateen, Y Combinator co-founder Paul Graham and Middle East venture capital companies Beco Capital and Venturesouq.
The company is maturing quickly. Although he declined to give revenue figures, Mr Mohan says employee numbers have grown to 23.
“A lot of our team have stock options and equity in the company – very typical of a Silicon Valley-style start-up,” says Mr Mohan.
The company has a client list that includes many of the region’s big-name construction companies such as Arabtec, China State Construction Engineering Corporation Middle East, Consolidated Contractors Company, Larsen & Toubro and Sobha Group.
It also has ambitious growth plans.
“We’re definitely looking on to other markets. A lot of my investors told me ‘we would rather you tried to be a $1bn company and fail than be a $50m company and succeed. Growing is key to our business because as a marketplace, the more suppliers we have, the better experience we have for contractors, and the more contractors we have, the better experience we are able to generate for our equipment owners,” he says.
Saudi Arabia is one market the company is looking to move into, but it is also looking beyond the Middle East towards Africa and South-East Asia.
“We essentially want to create the marketplace for contractors to source their equipment across all different projects across the eastern hemisphere,” Mr Mohan says.
He declined to discuss the company’s revenue model, but Tenderd essentially sits between the companies looking for equipment to hire and those looking for revenue through leasing. Both agree on contracts directly with Tenderd, but Mr Mohan says it provides tangible benefits to each side of the deal.
For hirers, it serves as a single source for materials at competitive rates. It also takes the headache out of the hiring process as Tenderd not only verifies equipment, but also the suppliers’ trade licence and any visas or insurance that accompanying vehicle operators need.
For equipment owners, the platform provides monitoring equipment that is live streamed on to a digital dashboard.
“On these dashboards, a contractor can see where their equipment is, how many hours has it worked, what is the fuel consumption, what are the utilisation rates, what is the operator’s driving behaviour,” says Mr Mohan.
Alongside geographical expansion, technology is the other area where Mr Mohan eyes growth.
A software known as Tenderd Track is offered to keep lessors and lessees informed as to where and how their entire fleet is being used. As construction machinery is progressing more quickly towards automation than standard cars (because sites are generally more controlled environments) there will be ways of controlling machines remotely in real time, either for efficiency gains or other purposes.
“We are partnering with OEMs (original equipment manufacturers) and other companies based out of Canada that do simulations to develop this technology, but we also have our own engineers who are able to collect data from the equipment that we currently rent out to contribute to this,” Mr Mohan says.
Although many contractors in the Arabian Gulf operating on thin margins have historically shunned costly innovations in favour of cheap labour, Mr Mohan believes that in the equipment sphere, automation and smarter systems are an eventuality.
“There are two schools of thought. One is how do I reduce costs as much as possible today and not care about tomorrow. The other one is how do we build for tomorrow,” he says.
“The former is something that we’re not catering to. Whereas if you do care about your business thriving and competing with more technology-savvy competitors, you have to care about technology. Otherwise, it’s not going to be competitive in the long run,” says Mr Mohan.
Updated: September 2, 2019 04:45 PM