SpotHero: CEO on proving Silicon Valley wrong to raise VC investment

SpotHero CEO Mark Lawrence claims that the company's struggles to raise from Silicon Valley funds in 2015 demonstrated a “bubble” mentality within the area.

SpotHero instead raised from funds based in Chicago and New York and recently closed a $50 million Series D, taking total funding to $117 million.

Here's why Lawrence thinks the Valley's culture needs to change to adapt to different markets.

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For a startup investor, knowing when to back a new idea when it could blow up in your face is tough.

But dismissing a potential market out of hand？ That's just illogical.

That's the view of Mark Lawrence, CEO of parking startup SpotHero, who says that fundraising was made extra difficult by Silicon Valley funds tech funds who refused to take his market seriously.

SpotHero partners with off-road parking garages to move the entire parking experience online, from finding a spot to paying for parking. But in 2015, when looking for Series B funding, Lawrence found what he describes as an “annoying echo chamber” among VCs.

“They would say to me, 'But no one is driving anymore,' or 'The future of parking is valet,” Lawrence said in an interview with Business Insider. “I said, 'That just isn't the case in the rest of the US, and we have the data to prove there is a market,' but they weren't interested.”

Deloitte estimates that the US parking market is worth around $30 billion in revenue annually, while the market for smart parking, which includes technological solutions like SpotHero's, could be worth $5.5 billion by 2024, according to Market Research Engine.

SpotHero instead found believers in Chicago. The firm raised $20 million from Chicago-based funds Chicago Ventures, OCA Ventures, and Pritzker Group Venture Capital, as well as East Coast funds including Battery Ventures and Insight Partners.

Two notable Silicon Valley funds did join that fundraising, too, in the form of Bullpen Capital, Draper Ventures, and e.ventures.

The experience was a chastening one for Lawrence, who said the responses showed a lack of awareness. He cited the huge number of drivers in the US and criticized the belief among those in “the bubble” that valet services are the answer.

“They thought the solution to mobility was to actually add more labor to the process,” he added. “All those valet companies they wanted to back have blown up and the bubble has been proven wrong.”

Since then, SpotHero has partnered up with more than 6,000 parking garages across the US, and is also increasing provisions for self-driving cars with autonomous vehicles set to make up a large chunk of the market going forward.