A Perth-based construction-tech startup has raised $6 million via an initial public offering barely 12 months after being founded, as it hopes to disrupt the car-park building space through its “modular” tech.
Parkd was founded in October 2016 by founding directors McGregor Thom, David Thomas, and Peter McUtchen, and after completing a $720,000 seed funding round in December, the team launched into 2017 with a plan to list on the Australian Securities Exchange by the end of the year.
The ASX has an expected listing date of December 11 for the company, which will provide a modular construction offering for car parks, allowing the company to pre-build and easily construct and adapt car park structures.
Speaking to StartupSmart, McUtchen says the car park model is perfect for modularisation as the dimensions of a car park are “fairly standard” no matter where you are.
McUtchen provides the engineering know-how to the project, with the other founding directors providing the entrepreneurial direction. The team has also landed Bronte Howson of Automotive Holdings Group fame as a non-executive chairman, something that McUtchen is very excited about.
“Identifying the right chairman was one of our key goals to substantiate our company, and in our instance, meeting Bronte Howson and having the opportunity to share our story and the opportunities relating to our business and get him on board as our chairman, was an incredible moment for the founding directors,” McUtchen says.
“The right chairman is a company-maker, and it demonstrates that there is somebody with specific experience in the market or field you are targeting who clearly see’s the company’s potential and who is willing to put their reputation and credentials against it. For us, having someone who’s successfully operated in the ASX environment with a rock-solid scorecard in a target market gives us some serious credibility.”
In 2016, the founders knew they needed some material contracts to make Parkd a reality. They say they knew the best way to approach a previously undisrupted market was to land a significant contract, get capital behind the business, and “hit the market hard”.
The contract materialised as one with City Subaru in Perth, which McUtchen says will help the team demonstrate the opportunities and benefits of the Parkd system.
Capital raising went smoothly for the company, which cut back on some investors after receiving $12 million in bids when only raising $6 million. Around $1 million of that capital will go into building the City Subaru park, with the rest going into developing other aspects of the business.
“Some of that money will go into further research and development in terms of modifying and improving the Parkd system to meet certain market needs. Shopping centres need slightly different carpark solutions to say car dealerships or hospitals, so we need to meet those needs,” he says.
“We’re also going to be using the money to build the business operationally.”
Construction space ripe for disruption
McUtchen believes there’s an enormous potential for disruption in the construction space, especially in Australia. The country’s extremely high cost of labour, yet its dependency on it for employment and wealth, leaves it ripe for innovation, says McUtchen.
“There are many different aspects to construction efficiency which could be improved through the use of disruptive constructiontech. We see the constructiontech space as one of the most fertile for improvement through AI, manufacturing, logistics and supply chain disruption that would affect consultants through to main contractors,” he says.
“Other than car parking structures, one of the spaces I see a huge opportunity in [is] modular residential and modular industrial construction.”
“Why use expensive traditional forms of construction for building car-park structures that are by nature a very functional and a non-aesthetic asset?”
For companies considering conducting an IPO, McUtchen says founders’ mindsets need to be set to the right dial when considering how much of the business to give away, claiming the wrong approach can “hamstring” growth.
“Going into the listing process, you need to give away the right amount of the business to realise its commercial potential, but people get caught up in thinking they’re giving away too much of the business, when in fact it is probably too little,” he says.
“Entrepreneurs often don’t see that they’re really hamstringing the potential for growth and the opportunity to raise capital by being overly protective of IP or equity.”
“That’s something a lot of people struggle with. One of the key challenges was promoting trust within the team and ensuring decisions were made with a level head without ego and emotion clouding things.”