Weekly Venture Highlight

Gearflow, a Chicago-Based equipment parts market platform, managed to raise a $5.5M pre-Series A round amid one of the toughest venture fundraising environments in recent history, as value-ripping rate hikes push most VCs to the sideline.

Many startups are treading water right now, with the easy money received in 2021 running on low. The tumultuous economic backdrop led to chaos in the public exchanges, which has catalyzed fear across investment scopes and allowed the market to sort the longer-run studs from the duds.

So what drew Brick & Mortar, a premier construction tech VC fund, out of the woodwork to lead Gearflow’s latest cash infusion? What makes Gearflow an Industry 4.0 stud?

Gearflow’s supply chain solution for construction equipment parts has uniquely positioned its increasingly automated B2B marketplace with a favorable long-term tailwind. As a result of the recent global supply shortage, OEMs have overbooked still burgeoning sales out through 2024, leaving leaders in the heavy civil space (Gearflow’s new target market) with replacement parts requiring older machinery, which is where Gearflow comes into play.

This niche ConTech B2B parts marketplace, like all great innovators, made a well-judged pivot from its original SMB/subcontractor market focus to target larger dirt-moving infrastructure customers with much heftier order sizes, having fleets between 500 and 2,000 units (high-margin, high-volume clients). Gearflow is now on the precipice of a volumetric demand explosion as its increasingly sticky customer base (the buyers) begins bringing in dealers (the sellers), and vice versa, kick-starting this built-world startup’s growth engine.

Gearflow’s savvy Founders, President Luke Powers & CMO Ben Preston, have proven their ability to effectively execute when the going gets tough, perpetuating quarter-over-quarter topline growth, a clear path to cash-flow positivity, and a well-manicured digital strategy for long-term customer retention.

Parts Hub, Gearflow’s newest data aggregating smart platform built to pull back the shroud of ambiguity surrounding the procurement process in construction (visibility is the most significant problem in AEC supply chains today), is now this startup’s primary customer retention & growth lever. Parts Hub, which has been in beta since May, is preparing for its formal launch in the near future, and Gearflow’s leadership team (along with Brick & Mortar’s GPs) is expecting this new offering to catalyze an inflection point of prolific expansion for the business.

Building automated predictive workflows around the procurement process will significantly help alleviate equipment downtime, saving heavy civil dirt movers $100s of thousands if not millions. Larger players are now adopting Gearflow’s supply & demand matrix matching parts platform, and user growth further strengthens its dealer/buyer network, fueling a strong organic expansion cycle.

Gearflow has proven case studies with leading rental and infrastructure players like Sunstate Equipment and Branch Civil, respectively, which can quantify the $100s of thousands in downtime costs it saved them.

Parts Hubs' predictive procurement management solution is expected to be optimized in 6 to 12 months for heavy civil contractors and rental organizations, with the goal of expanding its procurement management SaaS into other sector verticals. Industry 4.0 has the world onshoring operations providing Gearflow with a massive tailwind into the new normal.

Gearflow’s 4-man dev team (an integral part of the company’s 15-person team) has done a tremendous job building out its predictive Parts Hub. Now it’s up to sales & marketing to continue fueling its adoption in heavy civil/dirt-moving & equipment rental space, which is where a significant portion of that $5.5M in new funding will be allocated – supporting Gearflow’s apropos pivot towards higher dollar value customers.

Watch for Gearflow to fundraise a Series A round in late 2023/early 2024, the moment its hyper-scalable inflection point is reached. Gearflow is a construction tech stud, with a stellar management team that’s not afraid to change course towards margin-optimizing demand.

Check out BuiltWorlds Q3 Venture Investment Report if you want to take a deeper dive into what's happening in this burgeoning startup ecosystem.