Toronto-based AutoLeap is ready to put the pedal to the metal after closing $40.4 million CAD ($30 million USD) in Series B financing from San Francisco Bay Area investors.
AutoLeap sells software that helps automotive repair shops manage their operations. Since its Series A round in 2021, AutoLeap has tripled the size of its team and grown its customer base by 10x, helping auto repair shops across North America migrate from pen-and-paper processes and legacy or piecemeal tech solutions towards its modern platform.
“Instead of the technology putting wind in their sails … the technology, in many cases, is just dragging [auto repair entrepreneurs] down.”
As AutoLeap co-founder and co-CEO Steve Lau noted, this growth has been fuelled by the tough car market conditions, which have been a “net positive” for the company and its customers amid high new and used car prices and interest rates. “In tougher economic times and rising interest rate environments, people are less likely to buy new cars and more likely to service their old, existing cars,” Lau told BetaKit in an interview.
As a recession looms, the car repair shops that AutoLeap serves stand to benefit even more, and with its latest funding, AutoLeap hopes to help them seize the opportunity.
Founded in 2019 by Lau and fellow co-CEO Rameez Ansari, both formerly of FieldEdge, AutoLeap aims to help auto repair shops run their business and improve their customer experience. As Lau noted, “In this industry, very few people are excited to visit their mechanic. It’s almost like going to the dentist—people dread that—because the experience has not been good, historically, over the past decade.”
By increasing transparency and communication, AutoLeap hopes to fix customer relationships with auto repair shops. The startup’s platform helps all types of auto repair shops manage customer relationships, appointment scheduling, estimates, invoicing, parts ordering, and payments more efficiently through a single platform.
AutoLeap’s all-equity, all-primary Series B round was led by Advance Venture Partners (AVP) with follow-on participation from fellow San Francisco-based firms Bain Capital Ventures, Threshold Ventures, and Maple VC. It brings AutoLeap’s total funding to $53 million USD. Lau declined to disclose what the latest round values AutoLeap at, but did note that it comes at a higher valuation than AutoLeap’s $18 million Series A round from fall 2021.
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The company’s Series B round closed in March, shortly after the collapse of Silicon Valley Bank (SVB). Given the timing, Lau noted that there was “a bit of a stall” on the funds being transferred given that AutoLeap’s backers banked with SVB.
For its part, Lau said AutoLeap had “a small amount of capital” sitting in an SVB bank account that it ended up shifting over to a Canadian bank. AutoLeap has previously used SVB for venture debt, securing $1.6 million in 2020 as part of its seed round. Though AutoLeap had an option for venture debt from SVB following its Series A round, Lau said the company did not draw on any of it.
New AutoLeap investor AVP is an evergreen venture capital fund that invests in approximately three new companies per year. “We back businesses that we have the ability to invest meaningful amounts of capital in over time as they build what we think are multi-billion dollar enterprises,” AVP founding and managing partner David ibnAle told BetaKit in an interview.
ibnAle, who is joining AutoLeap’s board of directors as part of the round, said AVP was attracted to the calibre of AutoLeap’s team and product, and the size of its market opportunity, describing the auto repair shop tech market as “ripe for disruption.”
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According to Ansari, there are about 300,000 auto repair businesses in North America, the vast majority of which are independently owned. Despite its size, Ansari claimed the industry remains “dramatically underserved” by tech. “These entrepreneurs have worked incredibly hard to build these businesses,” Ansari told BetaKit. “But instead of the technology putting wind in their sails … the technology, in many cases, is just dragging them down.”
Lau estimates that more than 90 percent of the market currently uses either a patchwork of different solutions or old, legacy tech to run their business. Like AutoLeap, some other players have emerged in recent years to try and address the sector’s need for a more modern, all-in-one option, including United States (US)-based Shopmonkey and Tekmetric.
Lau sees current economic conditions as a potential boon to auto repair shops. As the economy has deteriorated and interest rates have risen more people are opting to continue servicing existing vehicles instead as consumer willingness and ability to buy and lease new cars has decreased and used car prices have skyrocketed.
AVP’s David ibnAle described the auto repair shop tech market as “ripe for disruption.”
Amid the pandemic, prices for new and used cars alike have risen in light of supply shortages, and last year, the average age of light vehicles currently operating in the US reached an all-time high, which is notable because older vehicles typically require more repairs and cost more per visit. Ansari said that this has been reflected in demand for AutoLeap’s platform, noting that in the recent past, “every month [has been] a record sales month.”
ibnAle highlighted that AutoLeap has gone from “zero to meaningful scale” faster than its competitors. “They have 10x’d since the Series A, and I expect that that’s a repeatable pattern,” he added.
Unlike many other Canadian tech companies, AutoLeap has managed to avoid layoffs during the downturn, and the company has been growing its team steadily since its Series A round. Today, AutoLeap sits at about 150 employees, and is hiring.
Though current economic conditions have given a boost to AutoLeap, for his part, ibnAle believes that the startup is just as compelling in a growth economy given that its platform can help auto repair shops increase revenue.
Feature image courtesy AutoLeap.
