Automotive Ventures is excited to share our latest investment out of the DealerFund: EvenFlow.
In an environment where automotive dealerships face increasing profit margin compression on the Variable side of the business, it’s more important than ever to focus on improving and optimizing their Fixed Operations (Parts & Service).
However, with a perpetual shortage of technicians, dealerships are challenged to grow through increased staffing alone and must find operational improvements in order to yield higher production within their fixed capacity.
Across the industry, inefficiencies abound as technician clock hours are “spoiled” and never convert into flag hours, and over half of vehicle maintenance services are not performed at the OEM recommended intervals.
Ironically, given its importance and known inefficiencies, Fixed Operations has historically suffered from underinvestment from a technology and innovation standpoint.
Outside of automotive, over 20% revenue improvement has been achieved in large industries like airlines, apartment rentals, and healthcare by leveraging advanced techniques with capacity and pricing optimization to drive growth from their fixed operational capacity.
Automotive Ventures’ investment in EvenFlow brings this level of industrial-strength best practices and sophisticated AI-based tools into the scheduling of automotive dealership service appointments.
EvenFlow’s intelligent scheduling loads the shop to optimize technician capacity, and their customers are already increasing auto dealership service revenues by 10 to 25%.
Exceptional Leadership
One of the key factors influencing our investment decision is the exceptional leadership team at EvenFlow, who has extensive industry experience and deeply understands the industry's pain points and intricate technical details.
Founder Dave Anderson has unique expertise in solving real-time optimization problems characterized by fixed operational capacity and variable demand. Dave first tackled these problems while working at United Airlines where he held several executive positions.
While at United Airlines, Dave realized this challenging dynamic is pervasive across many business contexts but often misunderstood and underserved. Leaning on his mathematical training (PhD in Theoretical & Applied Mechanics), Dave has focused his entrepreneurial pursuits in this area over the last 13 years in building novel B2B SaaS solutions.
Immediately prior to EvenFlow, Dave was part of the founding team at Opargo, acquired by Veradigm in 2022, that brings AI patient scheduling for physicians. He is also an Adjunct Professor at Northwestern Feinberg School of Medicine where he has supported public health initiatives through the Institute for Artificial Intelligence in Medicine, including resource optimization planning for mass trauma events and the COVID-19 pandemic.
What Problem Is EvenFlow Solving?
Loading the shop in dealership service departments through appointment scheduling faces several challenges due to its dynamic nature. Customer demand varies significantly day by day and by time of day. Understanding “true” demand is difficult to predict as customers “no-show,” “walk-in,” and scheduled services can represent less than half of the total technician flag hours on the repair order. This is further complicated by an ever-evolving technician workforce which has varying proficiencies and specialization.
Current scheduling tools do not effectively enable service managers to navigate this dynamic, leading to several undesirable consequences:
Poor Customer Experience: By not effectively controlling the flow into the service lane, bottlenecks occur, especially in the morning. These bottlenecks lead to longer than desired wait times and customers wondering why basic service like oil changes take so long to complete.
Uncaptured Services: When bottlenecks occur, needed services are too often recommended for the next visit in an attempt to manage customer wait times. Unfortunately, while satisfying a near term customer need, this practice works against the customer’s interest of managing overall lifetime repair cost and leaves money on the table for the dealership.
“Spoiled Capacity”: During off-peak times, especially in the afternoon, technicians are at risk of being underutilized. Without a steady flow of vehicles, technician clock hours do not generate flag hours and the lost production opportunity is “spoiled” forever.
Strong Early Traction
EvenFlow has exhibited impressive initial traction in terms of customer acquisition, user engagement, and revenue growth. They have a strong and growing pipeline of potential customers and have proven their ability to convert the pipeline into paid, recurring clients. This early validation underscores the market demand for their offering and validates our confidence in their ability to execute.
Market Potential
We believe that U.S. dealerships have a $30 billion opportunity within their existing customer base upon widespread adoption of revenue and capacity best practices. The market opportunity for EvenFlow is significant in their quest to support dealerships capturing their service revenue potential.
In addition, we see future opportunities to leverage EvenFlow’s capacity management and price optimization engine to extend its product offering into additional areas of the dealership.
The EvenFlow Solution: A Deeper Look
EvenFlow’s proprietary algorithms and software apply best practices in airline revenue management and Google search engine optimization to automotive service scheduling:
- “True Demand” Prediction: Loads shop based on predicted flag hours adjusted by technician efficiency
- Dynamic Capacity Management: Auto-adjusts available capacity based on employee schedules
- Open Recall Capacity Management: Embeds parts availability into appointment availability logic
- Dynamic Pricing for Maintenance: Optimizes effective labor rate through demand-based pricing
- Employee Assignment Algorithms: Auto-assigns service advisors and/or technicians to appointments based on objective criteria to fairly balance employee compensation potential
- Simple Booking Experience: Customizes to the needs of each dealership and brand to drive customer self-service.
Network Effects
As the company scales and adds dealerships, it will benefit from network effects from its proprietary dataset: EvenFlow’s system gets stronger and learns more based on the amount of data it collects, and all dealers benefit as their network grows.
Alignment with Our Investment Thesis
The EvenFlow investment aligns with the Automotive Ventures DealerFund thesis and our strategic focus areas. The thesis of the fund is to invest in the next wave of innovation to help automotive dealership operations. EvenFlow brings a proven competency from outside of the automotive vertical to focus on solving a real, validated need at the intersection of AI, Analytics, and Process Automation and has the potential to fundamentally improve how dealerships run their Fixed Operations. EvenFlow's mission, vision, and values resonate strongly with those of the fund.
Over time, we believe this investment is positioned to take dominant market share, has strong potential for eventual exit, and to drive outsized returns for our investors.
We’re thrilled to be part of EvenFlow's journey and are confident that our investment and contribution to the company will not only yield significant returns but also contribute to the company's emergence as the leader in the broader automotive industry. We look forward to collaborating closely with Dave and the EvenFlow team and playing a proactive role along their path to success.
