SpotScout Wants to Be the eBay of Parking Spaces
BY Dalia Fahmy
First it needs $5 million.
The Pitch: We've built an online market for parking spots. Drivers can search for three things: spots in garages (we have agreements with hundreds of commercial garages); private spaces advertised by anyone with a driveway or garage; and on-street parking. In the first two cases, the seller pays us a 1 to 3 percent commission. With on-street parking, the person vacating the spot sells her information--where she's parked and when she's leaving. We will launch beta versions in New York City, Boston, and San Francisco later this summer.
Owners: Andrew Rollert, 33
Location: Cambridge, Mass.
2006 Revenue: 0
2007 Projected Revenue: $2.6 million
Investment Needed: $5 million for marketing and sales staff to help the company expand
Clients: Drivers in congested cities and advertisers who buy banner ads on SpotScout's website
Recent Buzz: Lots. Mentions in The New York Times, The Boston Globe, Financial Times, The Washington Times, USA Today, and on CNN, MSNBC, and NPR
The idea is very clever. But the part of his business that has generated the most buzz--selling information about on-the-street spots--will never work. How would you like to pay for the right to use a spot, and maybe even drive there and wait, and then have some guy who's never even heard of SpotScout pull in ahead of you? That doesn't mean the business concept can't work, but it needs to revolve around private parking spots and commercial garages. My suggestion would be to raise up to $1.5 million from angels now, and raise the rest from venture capitalists later.
Investment committee chair
Vegas Valley Angels
What's the barrier to entry?
It's an interesting idea. But I need more information on the size of the market. Is it one million spots a year, 100 million spots, a billion spots? Also, Rollert should talk more about how he plans to protect his intellectual property. What's his barrier to entry that will prevent competitors from taking over? The raise is a little much. I think he should raise $2 million to $3 million and then prove that he has a business in two or three cities. He needs to prove that people will actually sell information and buyers will be willing to pay for it. But the pitch was good enough that I'd give this guy a meeting.
Focus on garages
I like the concept. There's a market both on the buy side and the sell side, and I think it's very scalable. He'll definitely need an initial investment to get him over the hump, since he has to show traffic numbers to advertisers before they'll give him much ad revenue. For now, I'd say he should raise $3 million and use it to build scale by trying to get wholesale deals with large garage owners. I think he should ignore the private parking spot component, otherwise he's introducing a lot of new competition to his more valuable customer base--the garages.
Managing general partner