The long-term future of transportation might see fewer people owning cars, but today a lot of private vehicles are still on the road, and now a startup that’s building a multi-faceted marketplace to help fix them has raised some funding. Caroobi, a Berlin company that connects individuals with mechanics, and mechanics with parts suppliers, has picked up $20 million, money that it plans to use to expand its business into new markets — it’s active today only in Germany, Austria and Switzerland, and is just starting to open for business in the UK — and its platform to cover a wider range of services.
The Series B round was led by NGP Capital, formerly known as Nokia Growth Partners, a fund backed by the Finnish telecoms giant. This is part of its “smart mobility” investment strategy.
“We are looking for promising companies in the mobility sector globally and believe that the integrated model across the value chain that Caroobi is building has huge potential. The team is great and we are looking forward to supporting the company’s international expansion and building a global category winner,” said Walter Masalin, Partner at NGP Capital, in a statement.
Other investors in this round include Target Global, BMW iVentures, DN Capital and Cherry Ventures.
The BMW investment is financial, co-founder and MD of Caroobi Mark Michl said in an interview, with no strategic plans for now between the two. Although BMW an iconically German company, the iVentures arm is actually in the Bay Area; Caroobi, in fact, is iVentures’ first investment in BMW’s home country.
Caroobi is not disclosing its valuation but I understand that it is now over $100 million. The company is not yet profitable, by design, and has raised around $30 million to date.
The amount of this investment is notable when you consider the size of it versus the potential of Caroobi’s business today. The company says that in its current German footprint, for example, it works with only 750 mechanics today, but with a total addressable market of around 35,000 mechanics. It’s currently servicing some 2,000 cars per month and growing 100 percent month-over-month.
“The market potential is huge, and we currently have well below only one percent of it,” Michl said.
As Michl and his co-founder Nico Weiler explain it, Caroobi is providing a platform to fill what is effectively a gap in the legacy automotive market.
In many countries, one of the most common routes for repairing a car, or getting it serviced, is to use an independent garage or mechanic. But these days, as much of the process of finding and contacting tradespeople has moved online, much of the mechanic world has not come along.
You may find some recommendations on services like Yelp, and even some targeted directories that help direct referrals for independent mechanics to quote for work, such as WhoCanFixMyCar in the UK, or even services that come to you on-demand, such as YourMechanic in the US.
But what’s largely lacking is a platform that not only helps match up car owners with mechanics and their garages, but also provides those customers with transparent price lists and helps to manage not just bookings, but payments and potentially disputes (and soon, service guarantees). On top of that, the Caroobi platform offers services to the mechanics themselves.
“There are two customers we are addressing,” said Michl. “One is consumers, who often may not know if mechanics are offering them fair quality and price. We are getting around that by offering services directly to customers,” he said. This includes the option to use a team of experts, remotely via the Caroobi app, to help diagnose the problem.
“Two is the mechanic,” he continued.
Mechanics services come in two parts. The first is the customer-facing side, where Caroobi is giving mechanics a more efficient way of interfacing with customers, with accounting and billing software that links up with Caroobi’s back-end, and scheduling tools to book in appointments. Weiler said that Caroobi’s customer referrals typically account for 50 percent – 60 percent of all mechanics’ jobs once they join.
The second is the supplier-facing side, which is a newer area of business for Caroobi. Mechanics typically work with either a small group of distributors, or more likely one or two purchasing groups, which gives the mechanics less flexibilty in what they can order, the general supply levels, and how much everything costs. Caroobi currently sources parts from over 100 distributors and manufacturers, giving those mechanics a better selection and likely more competitive pricing.
“For mechanics, the parts acquisition process has always been intransparent and inefficient. By sourcing our parts directly from manufacturers we are establishing a lean, efficient process in the market, which becomes more cost effective for our customers and partner mechanics.” Michl said.
Caroobi is not disclosing what this works out to in terms of actual prices, or what kind of a cut Caroobi gets from it. Michl does say that the company takes a small percentage for every kind of transaction, and that these often work out to be competitive or even cheaper than what the mechanic might have charged, were he working directly.
For now, Caroobi is going to remain focused just on growing its business providing car repair services to consumers, and services to mechanics both to source parts and manage their businesses. But you could see the potential of offering this service to other sectors that are heavily populated by small businesspeople or sole traders, who have been late (or are yet to arrive) to the idea of tapping technology to bring their businesses into the 21st century. Other tradespeople such as large appliance technicians can be equally hard to find for the average consumer, and those technicians also could use better access to parts and that value chain.
This potentially puts a company like Caroobi — or at least the business model behind it — into the crosshairs of companies like Amazon, or even Square. The former is not only selling cars and car parts, but has been eyeing up ways of building up its services business, and this seems like a natural complement to all of these. The latter type of company, meanwhile, has developed a strong platform for servicing small and medium businesses, and similar to Caviar, this could be one way of building up a stronger vertical operation targeting tradespeople specifically with more than just purchasing but business services.
It’s notable that both Michl and Weiler both hail from not from an automotive background but another area that has been much-shaped by the rise of omni-commerce and all the logistics of managing on-demand consumer services around that: food. Michl had previously worked at meal-kit provider HelloFresh, while Weiler previously worked for table booking service Quandoo, known as the OpenTable of Europe, acquired by Recruit in 2015.