Caroobi, a marketplace for automotive mechanics, raises $20M led by Nokia’s NGP Capital

The long-term future of transportation might see less 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. “Two is the mechanic.”

Mechanics services come in two parts, Weiler said. The first is the customer-facing side, Caroobi is giving mechanics are 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.

Indiegogo expands its efforts to help Chinese startups reach global consumers

While crowdfunding company Indiegogo has been running a pilot program in China for the past couple of years, it’s now building on those efforts with the launch of the Indiegogo China Global Fast-Track Program.

CEO David Mandelbrot is in Shenzhen, China this week to announce the program, which is designed to help Chinese entrepreneurs reach a global audience. In an email, he told me:

The China Pilot Program is officially out of pilot phase — today, we are officially launching the Indiegogo Global Fast Track. During the pilot phase, the team experimented with different ways to help service Chinese brands and manufacturers who were looking to launch products overseas. After helping companies raise over $100 million and launch over 3,000 China-based projects over two years time, the team has finalized its new suite of services.

Those services include guidance around crowdfunding and marketing in the United States and other countries, access to a network of more than 65 service providers (including retailers and marketing firms, as well as Indiegogo’s manufacturing partner Arrow Electronics and shipping partner Ingram Micro) and Chinese-to-English consultation with bilingual staff.

Even while in the pilot phase, Indiegogo has had some success stories in helping Chinese companies launch globally. For example, Bluetooth headphone company crazybaby raised more than $4 million across three campaigns.

Mandelbrot said Indiegogo also has opened a satellite office in the Tencent incubator in Shenzhen — a manufacturing hub that’s become a hub for hardware startups, too.

The Uberization of telcos

For the past decade, telecommunications companies around the globe have been grappling with falling average revenues per user equaling stagnant growth rates.

While particularly mobile operators have enabled increasing prosperity in third-world countries, new ways of working and fueled entirely new markets, much of the wealth created has landed on the books of companies that we look upon with increasing discomfort: Google, Amazon, Alibaba, Tencent and others. And as if this was not enough, the very ingredient — ubiquitous connectivity — that has served as lubricant for the disruption of entire industries is now on the verge of being disrupted itself.

While many expect finance or healthcare to be next on the list of global serial disruptors, and technologies like wearables, blockchain and AI are cited to be the nails in the coffins of these industries, small players have cooked up the ingredients that could well marginalize today’s prevailing telco business models globally. There are three ingredients that could make that happen…

Lack of customer trust

Among the top 100 most trusted brands globally, you will find companies of almost any industry, except telco. You will find our serial disruptors, big brand consumer packaged goods, car manufacturers — even banks, payment companies and healthcare service providers. But you won’t find telcos. In their battle for growth, telcos globally have largely alienated their customers for the sake of managing yield and profitability.

Furthermore, simple customer engagement processes are often broken, and telcos have struggled to achieve a high quality of service with zero defects, high responsiveness and a great customer experience on even their most relevant customer interactions. They have broken the trust equation with their customers.

An existing trusted relationship is hard to disintermediate.

Why is that relevant? Because trust is an important ingredient in disintermediation, à la Uber or Airbnb. Uber has put trust and ease into the car-hailing business, while Airbnb has put the trust in-between guest and host. On the flip side, an existing trusted relationship is hard to disintermediate.

However, the telco-customer relationship, as global brand indicators show, is ready to be disrupted. Perhaps even more so than the bank-client or doctor-patient relationships.

Liquid infrastructure

While telcos are grappling with fixing their customer front ends, becoming more nimble and responsive to customer needs and putting “greatness” back into the overall customer experience equation, small startups (and large telco suppliers alike) are creating what is known as “liquid infrastructures.”

In today’s cloud-based world, global network traffic is exploding while traffic patterns, with globally scaled and load-balanced cloud-based back-ends, are becoming more and more fluid and less predictable. Likewise, decreasing enterprise assets actually connect to the enterprise network directly.

The internet of things (IoT) is creating massively distributed architectures with globally roaming assets that need to seamlessly blend into critical enterprise applications. So, enterprises are challenged with creating more flexible network infrastructures that not only connect their various operating sites, but also create reliable connections to public cloud service providers, while connecting remote and mobile IoT assets to the core network. And all that while accommodating massive shifts in traffic patterns depending on the day of the week, time of day or reconfigurations happening at service providers.

Liquid infrastructure promises to provide a solution for such challenges, and it’s not a concept telcos are capable of, or offering, in the market place as of now. It is players like Waltz Networks, a venture-backed startup from San Francisco, that are disrupting the market place by providing solutions for the completely self-managed, liquid infrastructure that can handle today’s network demand.

Envision such an offering as a global OTT service and you have a recipe for a serious contender to the global enterprise telco services market.

“On the fly” mobile access

Redtea Mobile is another such interesting disruptor in the telco space. Imagine your IoT assets are roaming around the world globally. Which telco would you go to in order to buy a data plan, plus device management, which enables you to provision and deprovision your devices globally and on the fly?

Telcos globally have been struggling to come up with competitive offerings that make managing such global asset bases economical and a breeze. That is firstly because none of the globally leading telcos can offer a truly global network — be it of their own or partner assets. Secondly, given multiple telcos are forced to collaborate if they want to offer a global virtual mobile data service, long-standing roaming agreements often stand in the way of economical pricing models. Telcos are not yet willing to sacrifice existing global roaming revenue at the expense of a potentially growing global IoT mobility data market opportunity.

Companies are better off disrupting than being disrupted.

Despite these challenges, however, the demand is increasing. While global mobile traffic was 7 exabytes in 2016, it will skyrocket 700 percent by 2021. That’s where Redtea Mobile comes into the picture. With Redtea Mobile’s technology, you could imagine someone buying regional capacity with enough associated international mobile subscriber identities (IMSI), the unique numbers assigned to mobile phone users, around the globe at wholesale prices, bundling this capacity as a global mobile IoT data service, and reselling it to enterprises globally to fuel their IoT devices.

The way Redtea Mobile’s technology works is that it can reprogram eSIMs on the fly from the cloud, so a device that operates on one mobile network in one country can be reprogrammed to another network on the fly once it crosses the border.

Both Redtea Mobile and Waltz Network enable the disintermediation of telcos, cutting out the expensive middle man. In the scenarios described above, the end-customer relationship would likely not reside with the telco, but with a service provider smartly repackaging core telco services with new technology into an over-the-top (OTT) service that completely marginalizes the telco to a pure infrastructure provider — much like the Uber drivers or the Airbnb property owners. And, as my first argument suggests, it is unlikely that many customers will bemoan the demise of global telcos as customer-facing service providers.

So what can telcos do?

Enough cases have proven already that companies are better off disrupting than being disrupted.

True, telcos have one strength that is impossible to beat — they own assets that are hard, in most markets impossible, to replicate. However, while telcos will not vanish entirely, they run the risk of being completely marginalized. To prevent that, they should drive disruptive change of their own. While small companies are innovating, telcos could be at the forefront of deploying those technologies across their infrastructure and of developing new and innovative offerings that disrupt their prevailing products and business models on top of those technologies.

Will this be enough to win? No, telcos will still have to fix the trust equation with their customers, become more responsive, etc.

But if telcos rely on their stagnant existing revenue streams and are too timid in embracing disruption, they are likely to continue their slow path toward the ultimate horror scenario of many telco executives: that of becoming a dump pipe.