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UpSteam Syndicate

Introduction

We’re not just another car wash company. We are revolutionizing the car wash industry by turning car washing into a full-stack service which takes place in the background, making it something you no longer have to worry about. No need to book or drive to the car wash and wait there. We wash cars on-demand or as a subscription-based service, where you can create a custom washing schedule according to your personal needs and let UpSteam take care of the rest. Using pressurised hot steam allows us to create a high quality and safe car washing service, without having to refill water after each wash.

The car wash industry has not seen any exponential innovations in the past 40 years. Creating better chemicals and building better wash-tunnels does not solve the #1 problem for customers. Since 2009, people have less leisure time every year, which leads to a situation, where stationary car washes have to fight for customers.

You save 1-2 hours of your time with each wash, whilst we do the work when you are not using your car. UpSteam is pioneering a way to an eco-friendlier car-care solution since we use up to 50x less water and eco-friendly cleaning products. We see this service expanding.

Problem

There is constant friction between car wash places and customers. Our main target customers like office workers, executives and working moms have to:

  • Fish for a perfect time to wash their car
  • Drive to a car wash and wait
  • Spend time, effort and fuel

Businesses want their cars to be presentable at all times, but to achieve that, they have to:

  • Pay salary for the employee who is going to the car wash.
  • Since cars have to drive back-and-forth, companies have to consider other accounting costs in their bookkeeping (fuel, amortization, etc.) .
  • Aside from completing their actual work tasks, employees must spend valuable time on going to the car wash, which affects company’s work efficiency.

With family, work and other commitments, it gets difficult for people, who work regular hours, to find the time to wash their car, so the task gets postponed for weeks or even months. Also, an average car wash uses 200-250 litres of drinkable water for each car and after use, most of that flows to our sewers, mixed with hazardous chemicals. If a regular car wash with one slot washes approximately 2000 vehicles a year, that could add up to 500,000 litres of wastewater.

Solution

We built a car wash on wheels and developed a unique monthly membership system, so you no longer have to worry about booking a car wash. UpSteam cleans your car while you work, rest or play. Most people regularly drive by a car wash and “fish” for a perfect time. Even if they would want to wash a car every 2 weeks or once a month, because of the queues, they postpone it to 2-3 months. A study we conducted with our own customer base showed us that our customers started washing their cars on average up to 4 times more often than they did with stationary car washes. Customers who value their time are willing to pay extra for the convenience. Also, due to lower expenses on landing, rent and utilities, we can operate with a higher margin.

Using powered steam and eco-friendly products, we can clean cars at your work, home or anywhere you like. Steam uses thermodynamic energy to safely clean delicate painted surfaces. Depending on the level of dirt, UpSteam can clean your car to perfection with just 5-15 litres of water and without any harm done to your paint. As a result, we can typically save more than 400,000 litres of water every year with each UpSteam unit. Some other benefits of steam include:

  • With the combination of heat, pressure and water you can use less chemicals for a better result.
  • Steam acts as a disinfectant which makes it perfect for killing bacteria when cleaning car interiors.
  • Thanks to its efficient water-use we can carry with us the necessary water for the whole day without having to refill.

UpSteam is automating the key elements of car maintenance. We are developing a mobile application to optimise most of the operations, logistics and customer acquisition. The platform improves user experience as customers can easily order a wash, set up a monthly schedule, pay directly in the application, see their wash history and make changes in their upcoming washes. The platform is used to cost-effectively enter new markets by automating up-sales and after-sales, creating referral codes and loops for customers. Our vision is to revolutionise the car wash industry by bringing it to 21st century on a global scale.

We see UpSteam as an end-to-end solution for the user across all layers of car-care. Car wash alone is an important part of taking care of your vehicle but we believe we can take it to a next level by combining car washing with additional car services (oil change, fuel, tires, car accessories) and management features(car inspection, maintenance, insurance) to our platform and thus building long lasting relations with our customers.

Market

According to an International Car Wash Association 2017 study, one third of car owners say that they would wash their cars more often if it was not so time consuming. While the total car-wash industry has grown over the last 10 years, the volume of do-it-yourself (DIY) car wash methods have decreased by around 25%.

The total available car wash market (TAM) in North America, Europe and Australia is around 19 billion euros of retail sales, of which 5 billion is in Europe. More than 1 billion European cars are getting washed annually, and the whole combined industry is increasing by an average of 2.3% every year. Since the year 2000, mobile car wash solutions have been on the rise. In the last 15 years, there has been a 69% increase in car owners using car wash facilities rather than washing their car themselves. The on-demand economy is also growing and beginning to attract a diverse group of consumers.

The industry is highly fragmented as 50 largest US companies hold less than 20% of the car washing market. 90% of car washes are owned by small business owners and since mobile car washing in Europe is a new trend, there are no "big dogs" around. Our addressable market is 20-30% of all regular car wash service users in most European urban cities with populations of more than 500,000. As we scale and increase our margin we could be able to nearly match the price point of conveyor and automatic car washes which would increase our addressable market.

With the current seed-round we plan on developing the necessary elements to prepare for launching UpSteam in Europe. When targeting new cities, we look at the market size, car concentration per square kilometre, economics, employment, weather conditions, cultural features and competition. Some of the potential cities with the highest average scores are London, Helsinki, Stockholm, Antwerp and Frankfurt.

Traction

UpSteam was publicly launched in February 2017. We started off with just a single unit, which we built ourselves, next to a construction mall. We personally visited 5 countries in Europe to choose the best steam technology available. We found that there are many companies producing steam-technology machines, but most of them lacked new innovative solutions to maximise the benefits of steam. For the first 5 months, UpSteam was just learning and generated only €4,500 in sales, until we landed our pre-seed investment round of €25,000 to start building up the company.

In August '17 we built the second (upgraded) unit and our third unit was built as a project by professional engineers, completed in June '18. To date, we have generated more than €115,000 in sales and raised €49,000 in subsidies, with our record gross revenue being above €15,000. Our average monthly growth rate over the last 12 month period has been 16%, with an MRR in July being close to €9,000, from 94 subscribers.

UpSteam has washed nearly 3,000 cars, served more than 700 unique customers and managed to close deals with 20+ B2B and 80+ B2C subscription-based customers. According to a survey conducted among our 74 regular customers, UpSteam Net Promoter Score (NPS) is 76. Keeping a high NPS score is also validating the potential success of integrating a referral-system to our platform. You can read our customer reviews on Facebook and Google.

By 2019, we hope to reach our milestone of 500+ subscription-based customers just in Estonia. We are proud that our pre-seed investors are also participating in this round. Once our platform MVP (minimum viable product) is ready, we will be ready to expand to new cities in Europe.

The chart below shows the revenue generated to date and projections after this seed round. While we believe that we can achieve projected results, past performance data does not guarantee future results.

Team

UpSteam founders have worked full-time in the business since inception. They are leaders with a bachelor’s degree in business & marketing (CEO), engineering (CTO) and management (COO).

The three founders have a unique and challenging experience of selling educational books door-to-door in the USA with Southwestern Advantage Company for a team total of 11 seasons. This is also where the team met. Building a business as an independent contractor trained them to sell, build successful teams, handle rejection, manage difficult situations with a problem-solving attitude and be accustomed to 70+ hour work-weeks. Because there have not been any great local mobile car wash companies to copy, the founders have developed a thorough knowledge base about the mobile car-care industry by themselves.

UpSteam was titled to be a TOP 3 business idea on Estonian national start-up TV-show "Ajujaht 2018".

UpSteam has 2 CTO-s. One on the technological side (Aleksis) and one on the development side (Jaan). Our developer has a 20 year experience in this field, working on multiple large international projects. He has been a co-founder in SaaS and complicated e-commerce startups. He knows how to define functionalities, formulate technical scopes of MVP, lead product definition and compose development teams. Aside from our executive board, we have 6 professional car washers.

Competition

Our main differentiator is the use of steam-technology, subscription-based model, ability to operate in minus degrees and using independent contractors instead of employees, to expand the business. This allows us to achieve a high MRR and lower customer acquisition costs.

We’ve carried out thorough research on both US and EU competitors’ applications to determine their key success factors. We have learned from those strenghts to create a unique value proposition which would going to give us a competitive advantage through our platform. For this to happen, we plan on developing a great front end (APP, iOS & Android) and back end (operational systems, web) which will be working together through API-s.

Stationary car washing has been a conventional business, but since UpSteam has combined its best elements with a door-to-door niche, we have a very few direct competitors. Our closest competitors like Washè, Washos, Spiffy and SuperBath are located in the US and Australia. Full-service car washes are our indirect competitors because they can provide a matching quality and range of services (interior cleaning, deep-cleaning, waxing etc.) like UpSteam does. Nonetheless, UpSteam has a strong and validated market advantage with mobility, eco-friendliness and customer value chain.

When looking to enter the business between building a self-service, tunnel, stationary or UpSteam business you get 2-5x quicker break-even point (BEP). The biggest impact comes from lower landing and fixed costs plus a higher margin.

Capital

We have managed to build a company through wisely focusing our expenses only on growth and development, but shortage of floating capital has been a limiting factor in our expansion plans. We have been cash-flow positive since Q1 of 2018, but as the founders have to devote hundreds of hours into manual operational work and we can’t order supplies in bulk, we are limited to a steady but restrained growth.

We experienced demand overflow with our 2 units which remained a problem with our 3rd unit as well. Now that the number of monthly washes is reaching 400 and growing, we need to build a system and a marketplace that could effectively manage both the front and back end of the business. We calculated that we could automate 100+ hours of human labour per wash unit, thus an effective platform has been one of the biggest bottlenecks to start taking UpSteam to foreign markets.

Benchmarking and using lean methodology has helped us develop a proof of concept and now we plan on scaling UpSteam from Estonia to Europe. Our current fundraising plan is as follows:

  • Founders, 20K, 02.17 – We used our savings to build our first minimum viable product (MVP). It was a prototype wash unit which we built ourselves and used to learn the basics of this business.

  • Pre-seed, 25K, 07.17 – At this point we had only hit our first €1,000 a month in revenues and we used that capital to finish building 2nd unit and start raising our product awareness.

  • Grants, 44K, since 01.18 – During an accelerator TV program “Ajujaht” we became more confident and aware about our business since we started hitting 300 car washes a month and more. With higher demand, we started developing our technology to a whole new level. We also added a third unit to our fleet.

  • Seed, 230K, 10.18 – Now that UpSteam has a scalable wash technology and validated the demand for our service, we need funds for building the necessary tools to start cost-effectively expanding outside Estonia. UpSteam will use the funds raised to build an extensive platform which would improve customer experience (UX), automate repeatable tasks and which (by our calculations) would increase our margin from current 33% to approximately 45%. We will build new units to serve the surplus in demand which we are currently experiencing with our three units. We will also need additional units for new market and capital to pre-validate new markets. That includes hiring a launcher, marketing, sales and legal fees. By the end of 1Q of 2019, UpSteam will then be able to enter a new city with 3 additional units. The units will enter the city one-by-one as we build up demand.

  • A-round, ~2.5M – After we have the platform, units and first foreign market validation, we will be ready to go global. At that point we need to invest capital into expansion, manufacturing new units, integrating other car-care services to our platform, increase marketing and sales.

Since car wash is a service that relates to a large group of people, public syndication is also a marketing channel to increase subscription customer-base and raise global awareness towards UpSteam.

Together with you and other investors, we can develop a great platform, speed up expansion to foreign markets and make UpSteam the next big thing in the car care industry. About half of the investment will be used for building a platform and the other half for expansion related costs. The raised investment, combined with our current revenues, would enable us to meet the above-mentioned goals.

Exit

As we scale, large car wash chains could be interested in either working together or acquiring a part of the business. Since all founders are fully committed in this business then we believe that we have what it takes to grow it into a global business. We see a bright future with UpSteam and currently we are not directly contributing towards a quick acquisition deal, but if the time and price were right, we would not hold back from an exit.

Since washing your car is just one element of full car maintenance, we see many potential large partnership deals or mergers with our service. Some of the possible mergers are:

  • Promote your business: Companies that produce vehicles (Citroën) or cleaning technology such as Kärcher want to jump in on using their products on our wash units.

  • Buy a new clean car: Premium car resellers (Mercedes Benz, BMW, Audi) want to add a new value to their new vehicles through combining the purchase of a new car with an UpSteam membership. As many new vehicles have remotely opening doors, this could open more opportunities on making our service seamless and frictionless for the customers.

  • Merging mobile services: With Uber already concentrating on food-delivery and Taxify growing its in-house carpark, one possible acquisition could happen with a larger transportation network company. Also ride-sharing companies need their cars squeaky clean and they already offer perks such as car wash to their drivers.

  • Sell “clean miles”: Full operational lease companies and car rentals want to integrate a more convenient cleaning service to their cars since it helps to maintain a higher resell value for their capital and puts more value to their core business.

  • Petrol stations: International petrol distributors like Circle-K, Neste, Shell, Lukoil or Chevron have bigger margins on car-wash. Selling petrol also drives traffic to their car wash. With start-ups already delivering fuel to customers’ homes and work, it could be possible for fuel companies to want to combine gas deliveries with car washing for their more demanding customers.

For our investors, we plan to pay dividends from profits as we start generating distributable profits. Considering our long-term vision, our fast growth rate and seed-stage we believe that we are able to offer a satisfactory increase in your investments value over time. We also believe that our investors should get to know the true value of UpSteam and we don’t want our investors to drive dirty cars. As a token of appreciation, we intend to offer exclusive UpSteam subscription deals to our investors. The dividend policy and gift program will be revealed during the proposal phase (once the indication phase has finished).

Valuation

Our valuation reflects our strong ambitions, current success and growth-rate. UpSteam considers that it has a validated business model which is potentially scalable globally.

Frictionless and seamless car-care could open great new opportunities for monetizing and building long-lasting relations with car owners. The business model has market validation in US, where on-demand car wash startups like Spiffy raised USD 14M and Washe raised USD 3.5M. Having a strong team, first class mentors, being cash-flow positive and generating a significant MRR before our seed-stage has been the basis of our value.

We are open to negotiating the valuation as we gain further interest from investors during the indication phase of this campaign.

Risk

We kindly ask all investors to carefully read through all of the available information in this campaign review. Currently unknown additional risks may also occur that could affect the success of this company in some way. UpSteam has worked on preventing all of the major risks below since the founding of the company.

Risks associated with business expansion

In order for us to expand to new markets, we plan to focus our energy on tackling the “sweet-spots” which would maximise our likelihood at succeeding in the respective region. We have defined a list of key metrics to help us identify and select the potential market, based on the highest attained score.

Before entering a new region, we plan to launch a pre-campaign to gather interest and test the market with a single unit. As soon as we reach 70% order capacity on the unit, our intention will be to introduce additional units. This procedure would also help us optimise our expansion in terms of employees required per unit.

Risks associated with protection of intellectual property

We believe that the key to protecting our technology is by continuously developing and innovating the systems and processes which we use. The system which we have developed thus far allows us to operate in sub-zero temperatures and we are currently developing a state-of-the-art winter focused system which should give us an advantage in northern countries.

As we develop and improve the platform, we expect to achieve higher margins and better customer satisfaction, which in turn would enable us to build long-lasting relationships with our customers and serve as a customer acquisition tool.

Risks associated with partners and public relations

The company’s growth depends highly on our ability to maintain a brand that is recognisable for its quality guarantee, customer satisfaction and environmental-friendly approach. For this reason, we seek to work with partners who share the same values and our vision to provide a better service whilst being mindful of the environment.

In the long run, we would like to position ourselves to be able to provide additional services, such as white-labelling of eco-friendly cleaning products that are targeted towards homeowners who own pressure washers.

The image below provides an overview of additional risks that UpSteam may be subject to.

Other

Before making decisions about the investment feel free to try out the service yourself at our homepage.

 

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