As of today in Europe and the US, around 300 startups are active within the smart parking sector. By screening them it becomes clear that the key business model for start ups targeting services for on- and off- street parking is transaction fees based. A little analysis suggests that pure information/guidance and detection companies won’t be paid for these services in the near future.

In general theses products and services are aimed to minimize parking cruising and reduce traffic due to parking, while reducing OPEX & CAPEX expenditures for cities and increasing parking operators revenues. The market for on- and off- street parking is huge and amounts to around $30B each in Europe and the US, with two-third of the market being off-street parking revenues. The Chinese market is still nascent at around $1B but growing at around 30% per annum, whereas the US and European markets grow only by 1–3% per annum. The pure transaction based slice of that market — taking around 3–5% in transaction fees — will amount to approx. $2–3B in the coming years. Additional markets are Peer to Peer marketplaces and B2B analytic platforms for parking operators.

The smart parking sector can be categorized in transaction fees or B2B platform

In fact the smart parking sector can be categorized into six segments. The first four of them a) info, payment and booking b) e-payment c) on-street guidance and detection and d) Peer to Peer Parking (P2P) platforms make money based on transaction fees. The last two — valet and B2B analytic platforms — have a different business model. The trends of the various segments are outlined below.

Info, payment and booking for on- and off-street parking

Which player has the most parking spaces upon it’s platform? Here a race is occurring. The two largest global players are Inrix and Parkopedia. Both have started with on-street parking data/information and are now also including off-street parking info combined with payment and booking. Currently, automotive companies are willing to pay around 1–2$/year/car for integrating those services into the car infotainment subscription services. Assuming that around 200–300m connected cars will be on the streets within the next 5 years, the market size is relatively small. Therefore, and due to competitive forces, both players are now also including payment services to take transaction fees. This becomes especially interesting when “cars” will automatically pay for parking. Thus the trend is that in the near future pure info platforms will provide such data for free and all players will make $s by taking a transaction fee.

Pure e-payment focused companies for on- and off- street parking

Here, three players are already dominating the market i.e.: a) Easypark, majority owned by Verdane Capital, a private Equity company — potentially looking for an exit, b) PaybyPhone, acquired by Volkswagen AG in December 2016, with approx. $350m in gross revenues and c) Parkmobile, the US entity is owned by the Dutch business travel group BCD, the European entity is owned by BMW. Given the trend in the connected vehicles, these platforms are also including automated booking and information systems about parking, and as such will enter the space of the first segment.

On-street guidance and detection

In this segment, a small amount of startups are active: they crowd-source parking data through smart phone sensors, sometimes combined with dedicated hardware-based sensors, statistics and/or parking regulations/location information. This either feeds directly into their own proprietary apps and/or they provide a Software Development Kit (SDK) for other apps based on their data/algorithms. Making money on this services is not evident and those platforms need to pivot into transaction fees as well.

P2P platforms

This model is straightforward as these platforms are parking aggregators of private or business owned parkings to make them available/bookable for other individuals. All these platforms make money by taking a transaction fee. Here, scalability is key, i.e. getting as many parkings online for the lowest customer acquisition cost (CAC) per parking. Many startups are active and as such the sector is ready for a market consolidation.

Valet parking

Various startups were founded in this sector in the US during the last years. Almost all failed (Vatler, Caarbon and Luxe) or pivoted to a totally different area ( Zirx to Stratim). Only one “Valet Anywhere” is still active and offers valet services for monthly subscribers. All of them underestimated the relative high CAC combined with high cost for the valet man force, with very limited economies of scale (there are only 1–2 parking events one person can handle per hour) plus unpredictable demand. In addition, expected discounts with parking operators where not achieved as demand was highest during their peak hours. Often parking spots had to be prepaid regardless of usage. Similar Valet startups are “popping” up in Europe since 2015. We expect that the history as in the US will repeat itself. This segment just doesn’t scale unfortunately.

B2B, data analystics, SaaS

These startups are focusing to increase the yield of parking operators and/or provide parking information for e-payment providers. Especially the ones improving the yield of operators are promising as most are still using excel sheets or even more simpler models. A promising one out of the US in this segment is Smarking .

From an investor point of view, the interesting bets within key segments have already been taken. Interesting investments can still be made within the B2B analytic platforms business segment.

1.   Background

Aster Capital recently led the $5m Series A round of OpenDataSoft, alongside Salesforce Ventures and returning backers Aurinvest Capital. The additional capital inflow will allow the company to better structure their international expansion as well as reinforce their leadership position in the French market.

Founded in 2011 with the mission of becoming the global leader in data publishing and sharing solutions for governments and private companies, the company is already the market leader in Europe with close to 100 clients, growing triple digit year over year. They have developed a user-friendly solution to allow data to be easily visualized, shared and reused in real-time across multiple layers of data access permissions, cross functionally and in a ubiquitous way, as it is deployed fully on cloud. Legacy systems, frequently presented in large organizations, are not an obstacle as the solution is agnostic, developed partly using Open Source standards, and features a large number of API/connectors to allow easy and seamless integration with enterprise / governments infrastructures in practically no time.

2.   Headline of why we invested

At Aster we recognize that building a truly successful story is matter of a few elements: a great and passionate funding team, a solid technical foundation and differentiated business idea or product and a large and sustainable market trend opportunity.

We have been impressed by the founding team: Jean Marc Lazard, Franck Carassus and David Thoumas all worked together before, have had previous experience including at least one other venture backed success story, and feature strong complementarity. In addition, their drive made them standing above the crowd and made us feeling “we want to have them in the Aster family”.

Their product is highly rated by their customers, easy to use with impressive utilization rate among their users and is clearly the result of a top notch team led by one of the co-founders. We have been impressed by the meticulous approach in dealing with their development, the customer needs, the future product roadmap.

And then the drivers of change that we expect to reinforce in the near future: at Aster we have experienced a profound evolution of the dynamics of how large organizations and cities interact with their main stakeholders. In particular the way we plan, design and improve our cities as well as our daily life within cities will become increasingly a matter of good data management. By the same token, the need of transparency and real time communication between Corporates and current and perspective customers, is becoming an element of differentiation, especially in some sectors that are perceived “less friendly” for the health and wellbeing of the planet. In other words, we believe that the promises of the Open Data are finally materializing and in our view OpenDataSoft is positioned as an enabler of this global Data Revolution.

3.   Trend/reference market

A few years ago, the USA became the first country to make all data collected by its government and related bodies “open by default”, with exception of personal and sensitive information such as the one security related. Now there are more than 50 countries and counting that have adopted the same paradigm, and no month passes by without a new government announcing to implement the same strategy soon. Although some of this data was already published in some form even before, it was mostly featuring poor visualization and usability. Now this is changing also thanks to big data infrastructure becoming largely more affordable and as result of that also large corporate organization are slowly but surely adopting the same strategy. It is not without reasons that analysts talk about the impact of the Open Data in sectors such as Education, Transportation, Healthcare, Government, Construction and Utilities could surpass $1tn in both US and Europe in the foreseeable future.

4.   Why/how well the company fits in this trend

In such a sizeable shift, OpenDataSoft is particularly well positioned to take advantage of the willingness of a large variety of sectors to make their data available and usable in short time, without costly implementation and with a great flexibility in terms of both client infrastructure and data security. Furthermore, their solution will allow a more efficient use of data also internally and will give customers the opportunity to take advantage of the Big Data trend which promises to help organizations to improve their internal operations and their effectiveness to go to market.

5.   What we look for at Aster

At Aster, we dedicate a lot of effort and spend considerable time to sit down with ambitious and passionate founders and unfortunately we cannot partner with all. Therefore, we have to make choices and often we need to select also based on what the company has been able to achieve without funding and limited resources. OpenDataSoft is a particularly clear example of how to take advantage and to certain extent enable a profound transformation of a very large sector in a very efficient and targeted manner.

Now, as we recognize a strong opportunity to expand globally, which is in part already underway, we have been excited to the opportunity to back such an ambitious founding team and are thrilled to support their plan.

We absolutely see the company at the heart of the digital transformation and data management, addressing a variety of large sectors, led by a top notch founding team, that has proven excellent execution with a global mindset. These are elements that fit perfectly with Aster’s model: local support with global reach, equally well connected with traditional and Corporate VCs as well as a large ecosystem of industrial partners providing access to large markets. We will stand by OpenDataSoft expansion, supporting them in the four continents with our various branches around the world (San Francisco, Beijing, Tel Aviv, Nairobi and Paris).

Serena Capital, Cap Horn Invest and Aster Capital have just participated in a 20 million dollars of financing raised by FinalCad to accelerate its development. Founded in 2007 to digitalise the construction sector, it is one of the global leaders in the use of digital modelling across the construction phases, with a fully mobile solution letting this be done right on the building site. FinalCad’s teams have succeeded in creating one of the leaders in construction optimisation through data analysis. Its founders cleverly pivoted in 2011 by launching a smartphone and tablet application under the current brand that helps building professionals drastically improve communication and progress tracking for construction sites. But though talented team and a solid technical foundation are key ingredients for the success of a startup, they are ultimately fairly common among a large number of young companies.

So why then, other than the team and the technology, do we at Aster believe in FinalCad’s original economic model? And why do we share the ambition of this company, which aims to make FinalCad the reference company in the BIM (building information modelling) market? Simply put, we think that FinalCad perfectly embodies value chain transformation of the construction market, making it the natural partner in this sector with an extremely high attach rate for the solution.

Digitalising the construction sector

To respond more precisely to these questions, we have to go back to the fundamental aspect of the company’s aim: digitalising the construction sector. This in itself is a paradox. On the one hand, the industry is one of the least digitalised, with IT costs (1.0%) that are far from, for example, manufacturing (1.7%). Incidentally, this is probably one of the reasons why this sector’s productivity remains relatively low. But while digitalisation in the construction sector is low, the sector’s clients (real estate managers, contractors) are nevertheless increasingly insisting on digitalised reporting and management, and digital models on the rise mainly due to the sector’s major customers.

In this context, FinalCad is particularly well positioned to take advantage of the new vitality that the sector will experience, as its solution represents the primary vector for increasing operational effectiveness and qualitative efficiency in construction throughout the process. The company’s solution is particularly well suited to the mobility and simplicity needed in real building construction tracking, drastically simplifying communication between the various parties present on the construction site by predicting construction flaws and digitalising the reporting and execution processes. In a low-margin sector with a big human component, the time gains can reach 11% with costs being reduced by up to 7%.

At Aster, we dedicate a lot of effort to identifying, meeting with and selecting the startups which seem to us to be the most promising with the necessary strengths and talented teams, as well as the ability to adapt, pivot and magnify their company’s technological and commercial potential. But we also feel that success is driven by vectors of transformation of value chains and markets, which act as catalysts for sector trends. These forces that often operate on certain markets and these breakthroughs that are often a result of the efforts of young companies can affect all sectors, including so-called traditional sectors in manufacturing and infrastructure like water, energy, transport, materials, food and construction. FinalCad is a particularly clear example of the transformation of a sector which has, for a long time, been considered completely closed off to technological breakthroughs.

A global player

As a key vector in the digitalisation of the sector, FinalCad has considerable potential in terms of international expansion, which is already well underway. Already the French leader in construction sector digitalisation, the company counts among its clients the three largest French groups, which are also among the top ten worldwide. In Asia, FinalCad already has several Asian players as clients, which are managed from the representative office which opened in Singapore in 2015 while supporting Bouygues for the construction site of the SportsHub in this country. Efforts will now be focussed on North America and the rest of the world, and no regulatory barriers or lack of interest are foreseen.

A company at the heart of the digital transformation of a traditional sector and a first-rate team resolutely focussed internationally – these are attributes that fit perfectly with Aster’s model, and the firm seeks to act as a catalyst for venture rounds through an ecosystem of industrial partners providing access to preferred markets, and to facilitate FinalCad’s geographic expansion with support from Aster’s various branches around the world (San Francisco, Beijing, Tel Aviv, Nairobi and Paris).

This is why the entire Aster team extends its congratulations to FinalCad and is making its resources available to help the company and its project move internationally!