Mobile app, Easy Parking, announced earlier this week that it has secured USD 20 million in a Series A funding round, Beijing Times reported.
The app allows users to look for and book paid-parking in nearby locations. With the help of license plate reading technology, payment can be finished as soon as a vehicle passes a pay station, without requiring the hassle of waiting in line to finalise payment.
Launched less than five months ago, the app has reached deals with hundreds of parking facilities in Beijing and has expanded to several first-tier cities, including Shanghai, Tianjin and Shenzhen. The app now handles more than 5,000 service requests daily.
Easy Parking is only one of dozens of apps seeking to capitalize on the parking business. In June, another parking app, ETCP, raised USD 50 millionin a Series A round led by SIG and Matrix Partners.
Demand for public parking is extremely high in China. Car ownership reached 150 million in 2014, with 105 million cars being privately-owned. A state council study, earlier this month estimated, China’s current deficit of parking spaces to be as high as 50 million.
However, acute shortage of parking space does not immediately translate to opportunities for tech startups. Large car parks in major Chinese cities are an extremely lucrative source of income for local government authorities and powerful interest groups. It takes a lot of networking and negotiation to persuade car parks to give up some of their profits – usually they simply don’t – and sign up to new services.
“For example, the shopping mall may have said okay, but what about property management? If property management says okay, what about the car park itself? Even if every interested party says okay, will the pay station staff cooperate?” an anonymous insider was quoted as saying by China Business News. “There are no shortcuts. You have to knock on doors one by one.”
So far, parking apps have spent most of their venture money on hiring a small army of salespeople to do the legwork, and on subsidizing both car parks and drivers.
On the bright side, once a parking app has attracted enough users it can start providing value-added services like car washes and valet parking, to diversify its revenue stream.