Founded in July 2011, SpotHero offers online parking reservations. They make parking affordable, easy-to-access, and hassle-free. Drivers can plan ahead and search online to immediately find and reserve the most desirable parking spot with the lowest cost, best location, and appropriate time slot. Their software matches up in real time the available parking inventory of garages and lots with drivers in search of a space. SpotHero was the first company to bring anytime-online-parking reservations to Chicago.
PRODUCT/SERVICE: Drivers can access the SpotHero platform via the web or an app (iPhone or Android) and reserve a parking spot for an event, a day, or on a monthly basis. The platform displays the physical addresses, discounted parking rates, and time slots of garages and lots nearby the desired designation. After signing in to their account, users simply type in the address of their designation, enter the date and time, select their parking spot, pay with a credit card, and bring a print-out of the e-mail confirmation to the parking garage or lot. The parking garages and lots use a web interface to upload their parking inventory and update it in real time.
VALUE PROPOSITION: SpotHero offers the following value propositions: 1. Ease-of-Use–users simply go online and reserve a parking spot from among a list of available parking spaces provided by SpotHero. 2. Convenience–users avoid the frustration and anxiety of driving around the block hoping to find an open parking space. SpotHero empowers drivers to plan ahead. 3. Saves Time–users drive directly to their reserved parking spot which can also provide the shortest walking distance to their final destination. 4. Cost–users search online to find the lowest-priced available parking spot closest to their final destination. 5. Profitability–Parking garages and lots can fill empty spaces and maximize revenue.
MARKET SIZE: According to research by Colliers International, a leader in commercial real estate, the market for domestic parking is approximately between $25 and $30 billion. O’Hare Airport alone generates several hundred million dollars a year in parking fees.
REVENUE MODEL: It’s free for parking garages and lots to list their parking inventory on SpotHero’s website. They pay SpotHero $.99 plus 15% of each parking transaction.
MANAGEMENT TEAM: Mark Lawrence, co-founder/CEO, is a serial entrepreneur and former financial analyst at Bank of America. In addition, he has experience with social media and has been published in Lifehacker and Flightster. Jeremy Smith, co-founder/COO, is a former corporate financial analyst at Motorola. Larry Kiss, co-founder/CTO, designed microprocessors for Advanced Micro Devices and built mobile devices for Motorola. Alex Kruger, VP of Business Development, was Belly’s first employee and worked in enterprise sales. In addition, SpotHero has 10 employees.
COMPETITIVE ADVANTAGE: In less than 2 years of operation, SpotHero has driven more cars to parking garages and lots in Chicago than any other competitor. They wanted to establish a strong base in their hometown of Chicago before expanding to other cities. Their main competitor, Park Whiz, launched 7 years ago in 2006. Initially, Park Whiz dealt exclusively with events-parking but recently added daily parking to compete with SpotHero which focuses on daily and monthly parking. However, SpotHero beat them to the punch and dominates the Chicago market. In addition, they have expanded to Milwaukee and Washington D.C. and begun to gain traction. SpotHero provides a comprehensive list of competitors on its website: http://blog.spothero.com/parking-resources-companies-blogs/. If they can’t fix your parking problems, they’ll help you find someone who can.
PROOF OF CONCEPT: SpotHero began making money as soon as it launched in July 2011. It has the largest online parking inventory in Chicago and the number #1 rated parking app. SpotHero has been written up in Business Insider, Entrepreneur Magazine, Forbes, the NY Times, Reader’s Digest, GigaOm, Crain’s, The Atlantic, the Daily Herald, the Chicago Tribune, the Wall Street Journal, and TechCrunch, and featured on CBS, NBC, WGN, and Fox News.
CUSTOMERS/USERS: Currently, their platform is being used in 3 cities (Chicago, Washington D.C. and Milwaukee) where they have 150, 30, & 20 clients respectively. From January to September 2012, they brought $2MM worth of business to several of the largest parking operators in the U.S. including Central Parking, ABM, Laz Parking, and Impark. They expect revenue to double in 2013.
STRATEGIC PARTNERS: SpotHero graduated from Excelerate Labs, one of the top accelerators in the U.S., where they received a small amount of funding and extensive mentorship in exchange for 6% in equity. They also have partnerships with Theatre in Chicago and Metromix.
FUNDING: SpotHero has raised $2.5MM to date from 25 investors. The Series A round was led by Battery Ventures in Boston; other investors include David McClure (Founder of 500 Startups), David Cohen (Founder of Techstars), Tim Draper (Founder of DFJ), New World Ventures, OCA Ventures, e.ventures, Bullet Time, and Lightbank.
SUMMARY: SpotHero has emerged as the dominant player in Chicago and outmaneuvered major competitors such as Park Whiz and FasPark. Going forward, the question is whether they can deepen their penetration of the Chicago market and scale successfully to other markets in the U.S. They face considerable competition. ❒