The parking industry may not have expected such rapid shifts in technology over the last five years, but the next generation of parking companies came in with a firestorm of new technology for both private and public parking operators.
Over the last two years, approximately $150 million of venture capital has been invested in the sector to help solve the root of many problems the industry faced from both an operational and consumer experience perspective.
There wasn’t necessarily a lack of technology in the market, but there was certainly a lack of adoption and ubiquitous use of solutions intended to drive revenue and gain operational efficiencies. Much of what the last few years have brought us in the way of new and novel ideas have come in the form of more palatable pricing delivery models like Software as a Service (SaaS). As a result, the industry has been more open to implementing low risk (low capital expenditure) software services onto facilities that may not have made sense for operators with short term operating leases or capital constrained municipalities. With adoption and success of the new market entrants, came the attention of angel investors and venture capitalists (“smart money”); it’s no surprise that they saw an opportunity to connect technologies prevalent in other industries to an industry that lacked much technology adoption (see: “dinosaur”).
On average, venture capitalists invest $20 billion each year into companies in the United States. Venture capital is a main driving force towards innovation in many industries and has had, and continues to have, a massive impact on parking. It’s not often that a sector gets to experience a rapid influx of ‘smart money’ and talented people devoting their time to develop the next generation of solutions. This is a very exciting cycle for the industry and we should all take the time to learn more about the changing landscape.
Company lifecycle typically as follows: series seed or an angel investment, is the name given to any initial investment that kick starts a company’s initial product development. The Series A round represents the first round of institutional financing, by which a venture capital firm purchases a piece of the organization (minority investment) for a significant dollar amount. This type of investment aligns the interests of a venture capital firm in that the VC firm is held to standards of growth and profitability of their investments before either seeking additional investment rounds (B, C and so on), selling the organization or seeking an IPO (Facebook, Twitter, etc.).
Venture capital is not a charity; venture capital is not a grant; venture capital is not a lifeline to save companies that are low on cash. We can’t share the amount of times we’ve heard folks tout the idea that they “have not received any VC funding” as if this places the organization in a better position than one that has received institutional investment. It doesn’t; in fact, we’d argue that funding from VC has provides invaluable expertise from trusted advisors who have experience with rapidly growing successful technology and municipal service companies. As reference, Passport closed a $6M Series A round in December 2013. Growing a company from a small office to an international organization that employs 50+ supporting the largest mobile payment deals in North America is far from simple, and the funding and advisory has been instrumental to our market placement.
Reviewing where venture capitalists have made investments, a few main niches have emerged representing mobile payments for parking and transit and a marketplace for parking reservations and bookings.
Most household names, products or services started with VC funding — you name it. Apple and Microsoft both received venture capital. Google received an investment of $100K in 1998 before receiving their Series A investment in 1999 of $25M. Feel free to check out past investment histories of any company you’d like — this is generally public information that can be found at www.crunchbase.com
SaaS (Software as a Service) companies continue to shape the way companies interact with customers allowing parking providers to better own the experience and build loyalty ultimately maximizing long-term customer value. The next time you receive a call from an unknown vendor, you may want to give them a few minutes, you are given an audience to explain frustrations and initiatives to folks who are solely focused on building tools to improve processes. We’d be surprised to find a vendor who did not have its ears to the ground, listening to the next opportunity to innovate and build solutions. Together, vendors, clients and prospective clients can shape where we want this industry to go.
Bob Youakim is founder and managing partner of Passport Parking. He can be reached at firstname.lastname@example.org