SpotHero, a Chicago-based startup whose mobile app drivers can use to reserve a parking spot near their destination, announced on Wednesday that it has raised $20 million in a Series B round of funding, a little over a year after it last raised funding.
Though ride-hailing companies like Uber and Lyft have drastically changed how people get around their cities, cutting out the need to even own a car for some people, parking is still a massive problem. Drivers can often spend a lot of time circling around a city trying to find street parking or a garage that isn’t full, all while wasting time and gas.
SpotHero’s solution? Partner with garages and lots around a town, show the locations of all the available spots in a mobile app along with prices, and let drivers reserve a spot and pay for it through the app when they leave.
With the boom in on-demand startups — companies providing a service with just the tap of an app — SpotHero is not the only business seeking to ease the pain of parking. In particular, a handful of on-demand valet-parking apps have cropped up over the past year or so, mostly in San Francisco and New York, and investors are pouring money into them. These startups include Luxe, Zirx, ValetAnywhere, Caarbon, and Vatler. Using these companies’ services, customers can request a meeting spot near their destination where a valet will meet them (on time, ideally), and take their car to a nearby garage before returning when the customer requests it.
But SpotHero’s advantage might be its lack of needing to hire an army of workers; something whose cost should not be underestimated as hiring a staff isn’t cheap. Instead, SpotHero believes that by having partner garages and lots in as many locations around a city as possible it’s just as convenient as services that dispatch actual valets to park the cars. That way, customers should always be able to find an available spot near where they’re going and skip the hassle of finding parking. In a way, what drivers are to Uber and Lyft, parking spots are to SpotHero.
And the math is not bad: SpotHero is currently profitable in three (Chicago, Washington, D.C., Newark, N.J.) of its 12 cities, with New York City and Denver on their way. The company as a whole, however, isn’t profitable yet, co-founder and CEO Mark Lawrence told Fortune.
And yet, the valet companies above could eventually become direct competitors with SpotHero. Valet companies could add similar self-parking services, just as Uber began with a high-end black car service and eventually added its lower-end UberX services, which employs regular folks to drive passengers in their own car, and more luxurious rides. Luxe has already added a designated driver service in certain cities, and some of the startups mentioned above offer to fill up customers’ gas tanks or return their cars washed for an extra fee.
Lawrence told Fortune that he’s discussed offering valet services with some garages, but nothing is planned yet. The company will instead use its new funding to expand its corporate teams, as well as launch in additional cities (Seattle and others on the West Coast), and add more partner garages and lots in existing markets, according to Lawrence.
Insight Venture Partners led this latest round, with additional participation from Monkfish Equity and existing investors Battery Ventures, Bullpen Capital, Chicago Ventures, Draper Associates, OCA Ventures, Pritzker Group Venture Capital, and 500 Startups. Lawrence founded the company with Lawrence Kiss and Jeremy Smith. With the new investment round, SpotHero’s total funding is now $27 million.