You don’t have to be rich or T-Pain to be “on a boat.” You can rent one plus a captain for the day from Boatsetter. And now it’s got boats in more than 300 locations around the U.S. since it just acquired rival maritime marketplace Boatbound.
Boatsetter will be taking select talent from Boatbound plus logistics tech and its inventory of vessels for rental. A source familiar with the transaction said the acquisition was paid for with Boatsetter stock valued in the low-millions range.
The deal makes Boatsetter the biggest peer-to-peer boat rental service in the States, and possibly the world.
To fund future acquisitions of other competitors, Boatsetter also is announcing it has added $4.75 million in funding to its December 2016 Series A round, bringing the startup to a total of $17.75 million raised.
“The primary uses of the funds are M&A, growth and international expansion,” Boatsetter CEO Jackie Baumgarten tells me. When asked if she’ll go after European counterpart Click To Boat, she said, “I think we’re best poised for a roll-up strategy. There’s an opportunity to acquire and roll up several of the players. It’s ripe for consolidation.”
Everyone’s a captain
The company went on to process more than $25 million in booking requests. However, it also faced complaints about safety and insurance after a woman lost her leg in an accident after renting through Boatbound. The startup didn’t require people to rent a captain with a boat as Boatsetter does, which delayed rescue procedures after the renter was sucked into the boat’s propeller.
Boatbound quieted down since moving from San Francisco to Seattle 2016 to cut costs and push towards profitability. Now the nationally available service is somewhat oddly being acquired by a competitor that was only operating in one state.
The combined company hopes things will sail smoothly thanks to Boatbound’s technology for routing rental requests and Boatsetter’s focus on insurance.
Based out of Florida, Boatsetter is a three-party marketplace where private boat owners and professional charter companies, captains and renters meet. Users can pick from nearby boats, rent one with a captain attached or pick a separate captain, and quickly get out on the water at an affordable price. Since the private owners are just trying to make back some of the non-stop expenses of keeping a boat afloat, Boatsetter can be cheaper than going through a traditional rental company.
Baumgarten actually started a peer-to-peer boating insurance company called Cruzin that later merged with Boatsetter. That’s how Boatsetter provides $1 million in liability coverage, $2 million in boat damage coverage, plus additional umbrella coverage to make renters feel safe.
Boatsetter says it has 5,000 vetted boats available, and is poised for 5X growth this year to hit over 10,000 rentals. That’s because Boatsetter has only concentrated on Florida, while Boatbound works with vessels across the country. The business model sees Boatsetter take 28 percent of the rental fee from the owner, 10 percent of the captain’s fee and adds a 7.5 percent booking fee to the renter. Those combine into a healthy margin, considering Boatsetter doesn’t own or upkeep any boats.
Experience > possession
Now the 27-person startup has a new channel to chase the estimated $50 billion yearly total addressable market for boat rentals. Boatsetter has partnered with Airbnb’s new experiences platform to let people pay to learn to sail in the San Francisco Bay, take a lesson from a pro wakeboarder in Miami or have paella cooked fresh onboard by a chef in Barcelona.
Boatsetter’s biggest challenge will be developing awareness. Most people assume they need a ton of money or boating skills to get out on the water. But the world is shifting from a materialistic culture to an experiential culture. It’s why Airbnb is blowing up.
People want to do amazing things they can capture on their camera phones and share on their social networks. They want memories. And it’s hard to top gliding over the waves with friends on your own private boat… even if it’s just for the afternoon.