How to Get Funded in the Recession: The Frugal Mechanic Story
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auto website’s subdomain on its server and makes it look like the partner’s website. That helps the company’s partners monetize their traffic, and boosts traffic for these publishers—there are six of them so far, including CarDomain, LeftLaneNews, and CarType.
For the first few months, Peters and Underwood had consulting gigs to help pay the bills. They then connected with Founder’s Co-op in October, and found the fit as snug as a synchromesh transmission. The peer-to-peer investment firm is now helping the entrepreneurs with its considerable startup expertise and extensive network, Peters says. “They’re bringing a lot of contacts, from a LinkedIn standpoint. Especially through the white label side, to engage new car sales.” Helping make connections with a site like AutoTrader, for example, would be ideal. “These are super-smart guys,” says Peters. “We presented to them about two weeks ago. They were very supportive.”
The funding “gives us years and years,” Peters says. The company is still two guys, and Peters says the money should last them more than two years with no growth rate. They are not quite at cashflow break-even yet, but it’s approaching.
I asked Peters for his lessons learned. “Everyone’s been excited by a revenue stream,” he says. “We had not only a revenue strategy, but a distribution strategy. We’re not going to sit on our laurels and wait for Google to index us higher. We have a pretty compelling site that helps other sites make money on their content, and gives them additional content.”
The recession also seems to have worked in Frugal’s favor—at least for now. “People are keeping their cars longer, which means they need parts,” says Peters, who adds that he got a flat tire last weekend (and installed his own spare). “It’s been beneficial for us.” Next up for the company? Branching out to all-terrain vehicles, motorcycles, boats, and other water craft. “And then the huge world of international,” Peters says. There are a lot of parts that need replacing out there.