Last week Founders Co-op added a new company to our portfolio: Frugal Mechanic. This deal won’t surprise anyone who’s familiar with our investment thesis:
- It’s a niche offering (vertical search + price comparison in the $40B DIY auto parts market),
- With a smart distribution insight (white label parts search for auto enthusiast sites, of which there are *many*),
- Leveraging the Web as a database (via aggregation and normalization of large and messy public datasets),
- And they get paid directly for the value they create (in the form of referral fees for converted purchases).
The two-person team includes veterans from some familiar local names (including Microsoft and Amazon), with a solid grounding in Web engineering, large scale data management and SEO. They’ve only been in business since mid-2008, but they’ve already built a nice direct revenue stream and have begun to sign on notable names as white label partners (including another local company in the automotive vertical, CarDomain).
Next up for the company: ramping up their white-label outreach and continuing to integrate new specialty parts data sets (e.g., performance tuning, accessories, international catalogs) to address an even larger share of the market. Unlike most consumer / retail segments, auto repair tends to be counter-cyclical, so we expect demand for the offering to stay strong through the downturn.
So welcome, Frugal Mechanic – we’re excited to have you in the family.