We often compare today’s business environment with the print Yellow Pages era. Back in the day, multiple vertical categories were rolled into one big, fat printed directory. Then we evangelized the need to shift to a world of vertical-centric sales and content. That day has long since arrived. And vertical SaaS company Shopmonkey‘s recent Series C round has placed another exclamation point on that notion.
The 5-year-old company based in San Jose, CA just completed a $75 million raise less than a year after raising a series B round of $25 million. The company has raised $110 million since its founding.
With the new round of fresh money, the company intends to continue to add to its customer base of 2,500 auto repair shops, continue to build out the software suite, and add to its marketing and business development efforts. There are an estimated 175,000 to 235,000 local auto repair shops across the U.S. While acquiring 2,500 is no small feat, the company is clearly in the early stages of its market development.
Shopmonkey offers a set of solutions to the local auto repair shop ranging from $99 per month to what they claim as the “most popular” (not sure how that is measured) package at $350 per month. We’d guess the average shop is on the platform for something closer to $225 per month/$2,700 per year. The company also seems to offer any of its solution sets for “free”, leveraging the ever-popular “freemium” sales tactic.
Shopmonkey packages multiple functions into one cohesive cloud-based solution that can be accessed from multiple devices. These include computers, tablets, phones, and so on. Much of what the company has included in its solutions address the customer experience. For example, offering appointment reminders and email and SMS confirmations.
Here’s what CEO Ashot Iskandarian told TechCrunch. “It’s been an amazing industry to serve that I just feel like has trailed modern times and modern services by a factor of five to 10 years.”
We believe that’s been true of the auto repair space as well as many other local service categories. But that is changing partly due to the pandemic, and partly due to a shift in ownership of local businesses (next generation of owner/operators). And it is also partly due to technology that is increasingly easier to use.
With the used auto sector soaring, auto shops should be busier than ever. Since there’s a shortage of qualified and quality employees to help with the expanding demand, shop owners must turn to smart technology to help offset the lack of employees. While this may be a painful process in the short term, the long-term benefits are likely to be huge.
Something in the Data?
On another note, the VC firm Bessemer Venture Partners is one of the lead investors in this round. Bessemer is also a lead investor in ServiceTitan and Byron Deeter sits on both boards. This suggests to us that he’s seeing data that makes him quite bullish on the space.
Here is what Deeter said after the announcement of the recent funding for Shopmonkey. “As an increasing number of drivers seek to keep both used and new cars safely on the road, auto shops are in a unique position to set themselves up for long-term success by streamlining their services. And we are confident that Shopmonkey is the solution to help them do this most effectively.”
We agree that local auto shops and other local service business owners need to streamline their businesses using all the great small business technology out there. Here’s the big question, in our view. Which of the many SaaS providers can turn their customers into advocates to ultimately drive down their own CAC? It’s one thing to acquire a customer. It’s another thing to turn your customers into advocates for your software. If anyone can figure out that recipe, the money people will back their trucks up to their doorstep.