The Daily Download: WarrCloud News!
Steve Greenfield of Automotive Ventures highlights the technology deals of the day in this segment of the Daily Download.
Automotive Ventures is the resource for automotive technology entrepreneurs and financial and strategic acquirers. The company, founded in 2014, offers fundraising, growth strategy, and transaction guidance.
Today, we have an important deal in the fixed operation area to announce, as WarrCloud, the warranty processing automation SaaS provider focused on franchised automotive dealers, closed its $900K dollar Seed Round. The round was led by Automotive Ventures, with additional participation from Driven Capital Partners and Wise F&I.
For our regular viewers, you’ll recognize that despite the last couple of quarters of record profits, post-Covid Dealers are likely to return to an environment of increasing profit margin compression -- and the need to focus efforts on finding efficiencies across all areas of their operations.
WarrCloud is a cloud computing technology platform that automates warranty processing for automotive dealers. By outsourcing back-office functions, dealers enhance profitability, streamline processes and improve focus on the customer experience. WarrCloud’s mission is to drive increased profitability for the dealer, and they do that through tech-enabling their warranty processing.
Warranty is one of the few remaining areas of the dealership that has little to no automation, yet it is critical to protect and improve profit margins -- since warranty is the fastest growing segment of a dealer’s Service line item, which is the dealer’s primary profit generator. OEM warranty work has grown more than 38% over the last 5 years, currently generating almost $24 billion dollars in the U.S.
WarrCloud helps dealers in three key areas: First - they help dealers reduce costs: WarrCloud utilizes cloud-based technology to dramatically drive down expense. Utilizing the traditional manual method, the average warranty claim takes 11 minutes to process and consumes 6.1% of the value of the claim. WarrCloud reduces this cost by over 50%, significantly enhancing dealer profitability. Second, a focus on speed: WarrCloud can typically process all claims within 24 hours, greatly reducing submission and reimbursement times while improving the dealer’s OEM dashboard scores. Finally, WarCloud helps dealers with operational focus: By off-loading administrative tasks like warranty processing, service personnel have more time to spend on improving the customer experience, which increases loyalty and repeat purchases.
Prior to WarrCloud, dealers suffered manual, time-consuming claims administration practices where costs cut deeply into service profits. WarrCloud’s proprietary technology platform enables dealers to speed reimbursements, and avoid the risks associated with rapidly increasing warranty volumes in a time where the labor pool of qualified warranty administrators is disappearing.
From my perspective, WarrCloud is the right solution at the right time for the auto industry. WarrCloud’s strong value proposition helps dealers run their operations more efficiently.