In a recent trend article, we discussed how startups like ParkingPanda and ParkMe are trying to alleviate the pains associated with urban parking, since according to IBM’s 2011 parking survey the global average of time spent looking for a parking spot is nearly 20 minutes. Startup SpotHero is trying to help people pre-book and search available parking in their city, and the company has added $2.5 million in funding to expand beyond its home city of Chicago. Since launching, the company has brought over $2 million of parking revenue to its partners, which include parking garage operators like ABM.
Today’s funding round was led by Battery Ventures, with participation from 500 Startups, New World Ventures, Lightbank, and other investors. The company plans to use the injection of new funding to both grow its engineering team and launch in new cities, after having grown its base of available parking spots in Chicago and Milwaukee since launching there in early 2012. While they aren’t divulging which cities are next on the list, presumably they will look to cities like Los Angeles and New York City that are notorious for their traffic congestion.
“We got to a point where we were profitable in Chicago, and we literally just expanded to Milwaukee very, very recently, and we wanted to raise the money so we can really build this product out and take it across the country,” CEO and founder Mark Lawrence said in an interview. He added that while they will be forming some new partnerships with garage and lot owners in new cities, many of their current partners operate across the country, so they’ll be expanding on those relationships to get into new markets.
Like ParkMe and ParkingPanda, SpotHero is trying to help people find hourly and monthly parking in their area, specifically in parking garages and above-ground lots as opposed to on-street parking spots, or privately-owned spaces. Using the website or iPhone app, drivers can search for available spots, and unlike databases like ParkMe, drivers can actually book and pay for spots in advance. Drivers show an email confirmation to garage attendants, and often have to print out the confirmation to display on their dashboard in above-ground lots.
Until now the company only had a web presence and iOS app, but today announced the launch of its Android app, with a mobile web version to come. Right now Lawrence said the majority of the bookings are done on the website, but he expects that to go mobile since the biggest use case is drivers trying to find parking on the go. It will have to find a way around requiring drivers to print their spot confirmation if it wants the mobile apps to take off, providing a solution similar to QuickPay, which lets drivers in and out of lots by scanning QR codes.
The company will not only have to compete with other startups tackling the online parking space, but drivers who don’t have access to a smartphone, or who would rather drive around looking for parking than pre-book online. And while Lawrence said they do compete with companies like QuickPay and ParkingPanda, their biggest competition is the parking meter.
“Our biggest competitor is not ParkingPanda, it’s not online parking companies. Our biggest competitor is people parking on the street. It’s people who park without using any informational tools,” Lawrence said.
Lawrence said he’s open to forming partnerships with companies like ParkMe and others that are trying to solve a different part of the parking equation but don’t directly compete. With new funding in the bank and a solid base of partners and drivers in its home base, this Excelerate Labs graduate is poised to expand to new cities and grow its mobile-first book-in-advance parking platform. Its biggest challenge won’t be getting new parking partners, since they’re always looking for ways to fill their unsold inventory, but educating drivers that driving around in circles isn’t the most effective way to find a place to park.