Fat Lama recently raised $10 million for its peer to peer platform, a system whereby its users can rent essentially anything.
From cameras to power tools, users are able to pay a competitive price to rent another user’s property. Fat Lama has been compared to AirBNB, has been covered in Tech Crunch and The Telegraph, and has proven it’s concept in London. The recent seed funding round is intended to expand the company’s reach from London to San Francisco and New York.
Fat Lama is a consolidated, peer-to-peer sharing service. Yet, peers have been sharing and swapping on other sites and social media platforms for years. Fat Lama distinguishes itself not through the uniqueness of its premise, but rather through the implementation of its platform. Fat Lama offers insurance for borrowed goods, thereby reducing liability for owners, while also creating a consolidated platform through which nearly anything can be borrowed — rather than just specialized goods. Fat Lama further makes it easier to rent without a deposit, requiring only a debit card payment to complete the transaction. Though the platform currently focused on high end electronics, it intends to eventually be used for everything.
Fat Lama highlights an interesting shift in the habits of consumers. For many consumers, it is now easier to rent an object rather than buy it permanently. Rather than purchasing a $1,000 camera that they only need once a month, they can simply rent one without having to engage in maintenance and repairs. Many consumers find the concept of owning a multitude of things difficult to manage, as they may be in flux, frequently traveling, or simply minimalist.
By the same token, investors on the Fat Lama platform may very well find that they can easily recoup their investment in that $1,000 camera by renting it out multiple times. This creates an interesting dichotomy, through which individuals who are willing to make an investment can make money, while individuals who are more interested in ease of access can acquire the use of items for a low, one-time fee.
Fat Lama’s numbers were last reported at $21,000 in net revenue a month — though these numbers were for London alone. It remains to be seen whether Fat Lama will experience issues expanding into an American market. As many peer-to-peer services such as AirBNB and Uber have discovered, publicity and advertising are central to the success of this type of startup. Poor publicity can easily have a dramatic impact on a business, while a large advertising push is necessary to create an app that is populated enough to use.
A major hurdle associated with the rental industry is the fear of renting out personal property. Personal property can be stolen or damaged, and not all damage may be immediately evident. Fat Lama countered this by insuring every product for up to $30,000. This is designed to provide additional peace of mind to sellers, though renters are still going to ultimately bear the burden of reimbursing the company for damaged property.
For any startup, expansion is a particularly vulnerable time. Fat Lama expects to grow its 13 employees to 70 by the end of 2018, which is a considerable expansion — though understandable given their funding round. New York is intended to be a test bed for expansion, and as the company grows, it intends on tailoring its offerings to each individual market, as each market within the United States may have dramatically different rental needs.
Fat Lama is still only available in three major metropolitan areas: London, San Francisco, and New York. These are the areas that currently suit the platform best, but they’re also highly unique, metropolitan areas. Whether Fat Lama can surmount the hurdles ahead of it will be seen as it expands. More important is what this startup indicates for the future of consumer products and rentals, as peer-to-peer services are becoming extraordinarily important in our new gig-based economy.
Regards,
Ethan Warrick
Editor
Wealth Authority
