Chicago’s SpotHero, one of this year’s Excelerate Labs graduates, has raised $2.5 million in funding to help build its parking spot reservation business. The round was led by Battery Ventures with participation from 500 Startups, David Cohen’s Bullet Time, e.Ventures, OCA Ventures, New World Ventures, Lightbank, & Draper VC.
There are multitudes of parking spot locator and reservation apps, but SpotHero is trying to set itself apart from the pack by becoming a parking broker of sorts. As co-founder and COO Jeremy Smith explained at Excelerate’s demo day in August, SpotHero has built the back-end systems that not only allow lot owners to notify drivers of parking availability, but to tailor space reservation and parking pass offers based on inventory, demand and specific customers needs.
By using SpotHero’s platform, parking lot owners can sell discounted spot reservations for specific hours or days and even sell monthly passes through the startup’s website and consumer facing Android and iOS apps. Lot owners can even bid against each other for a customer’s business, Smith said.
Parking in a big city like Chicago may seem like a scarce resource, but in reality during most hours lots are sitting half empty. Consequently national and regional parking lot companies have taken a shine to SpotHero’s e-commerce platform in hopes of filling up those empty spaces. The service has been available for less than a year, but the startup claims to have generated more than $2 million in revenue for parking companies, even though its available in just two cities, Chicago and Milwaukee.
SpotHero was the first of the Excelerate’s 2012 class to raise funds, announcing an investment from Dave McClure’s 500 Startups the week before demo day (SpotHero won’t be participating in 500 Startups’ accelerator program though, choosing instead to remain in Chicago). SpotHero plans to use its new funding to hire more developers and expand beyond the Midwest.
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