No one likes having to go the automotive repair shop. There’s little transparency into what happens after a car is dropped off, invoices are often little more than a series of illegible bullet points, and the experience often feels chaotic.
AutoLeap, a six-month-old, Toronto-based startup that quietly raised $5 million in seed funding in September, thinks its team can figure out how to repair that broken experience by bringing car repair shops into the 21st century at long last. Its big idea is to help such shops organize their operations, schedule jobs, order parts, conduct digital inspections, and invoice customers in a transparent and seamless way.
It’s not the first to try to modernize the car repair process. A five-year-old, Seattle-based startup, Wrench, has already raised $40 million toward that end, while another entrant, RepairSmith, a two-year-old, L.A.-based car repair and maintenance service, is backed by Daimler.
Still, with a global automotive repair market that’s currently valued at $700 billion, there’s clearly room for more than one player and one approach, and AutoLeap has a few things going for it.
For starters, it has an investor base with some useful connections. Threshold Ventures, which led AutoLeap’s seed round, has ties to the automotive world, including through its bet on the car-selling platform Shift, which went public in October via a reverse merger.
AutoLeap — whose other venture investors include Maple VC, Liquid2 Ventures, Global Founders Capital, and Codename Ventures — is also backed by some notable individuals that hold sway in the world that AutoLeap is entering. Among them: Shift cofounder George Arison, former General Motors CEO Rick Wagoner, and former senior Bridgestone exec Ned Aguilar.
More importantly, AutoLeap’s founders worked together once before to reinvigorate a stodgy business. Before launching AutoLeap, co-CEOs Rameez Ansari and Steve Lau spent four years as the co-CEOs of FieldEdge, a SaaS company that helps contractors to run their small businesses.
They two — college friends who’d met at the University of Toronto — didn’t start the company. Rather, after Lau nabbed an MBA from Wharton for Ansari nabbed one from Stanford, they joined forces to acquire, manage and grow a neglected business after raising a a so-called search fund, a vehicle that’s backed by individual investors willing to bet that a team will find a company to buy, run it for some period of time, then sell it for far more money.
It was a productive experience for all involved. After spending $20 million to acquire FieldEdge, whose software had already been around for 30 years, Lau and Ansari so dramatically improved the company’s offerings that they were able to charge seven times what the company had previously charged for its products, says Lau. Then they sold it to the private equity firm Advent in 2018 for “north of $100 million,” says Lau.
It was a solid exit. Minus that $20 million investment, the team kept 30 percent of the remaining proceeds from FieldEdge’s sale, with the rest going to the search fund’s investors.
Even so, says Lau, he and Ansari might have kept going if not for rival ServiceTitan, which “went crazy on the fundraising front.” (The seven-year-old company has raised $400 million altogether from investors.) Between ServiceTitan’s daunting war chest and “given this was a first exit for us,” Lau says, “we transitioned out instead.”
Today, neither Lau nor Ansari wants to repeat the scenario with AutoLeap. Indeed, though Lau says the company is “heads down” and “not in any discussions” with investors now that it has secured seed funding, one imagines it won’t take long for AutoLeap to enter into discussions about that next round.
What investors would be funding essentially is a burgeoning software platform that aims to kill off paper flyers, crumbling fax machines, and sheaves of invoices — if only it can convince car repair shops to slow down long enough to try its software.
It isn’t a no-brainer that they will, admits Lau. “It’s a material onboarding effort, because you become the lifeblood of their business.” The sales process also requires convincing the shops to share their existing data and take the time required to be trained on how to use it.
Lau isn’t dissuaded, plainly. He says the time to onboard a new customer is one to two weeks and that “once they start seeing value, they get that ‘aha’ type of moment.” In fact, he says that AutoLeap is already working with a handful of shops, including several in Toronto, one in Las Vegas, and another in Boston.
As for its expansion plans, Lau says that some of the company’s seed funding will go toward digital marketing but that it’s also relying heavily on word of mouth. It helps, he says, that garages are often clustered in any one geographic area, which he believes will enable AutoLeap to spread quickly.
There isn’t “a lot of data” to support that assumption, offers Lau. But if AutoLeap has its way, there will be soon enough.
Above, left to right: AutoLeap co-CEOs Rameez Ansari and Steve Lau in a photo that Lau readily volunteers was Photoshopped owing to the pandemic.
via https://AiUpNow.com December 16, 2020 at 10:11PM by Connie Loizos, Khareem Sudlow,
