Build it and they will come: A lesson for start-ups in identifying opportunity

Digital veteran Phil Cooper provides news and insight on what's happening in the London start-up scene. An internet entrepreneur, Cooper has built and sold two digital businesses – the last to Fox/News Corp for an undisclosed eight-figure (US dollar) sum – and has just founded the native advertising business neoncandi.com

In the Start-Up Blog, we’ve already covered some practical advice on turning your idea into a business, finding funding and dealing with the pressures that crop up along the way. So today we’re putting this in context by looking at how a real business has adapted to the unique opportunities and challenges of the start-up journey.

Carwow began trading in May 2012. In the year or so before, the founders James Hind, Alexandra Margolis and David Santoro saw the opportunity to turn their digital car guide business, Carbuzz, into the earliest version of Carwow – an extremely detailed online car showroom. Up to February 2014, they had facilitated more than £30m in new car sales and created the foundation for a much larger opportunity. “As you can imagine, online buyers require accurate detailed imagery, well-presented information and incentivised pricing,” said Alexandra. ”We work hard to fulfil all of these needs”.

To support this growth ambitions, and on the back of its trading performance, Carwow was able to attract £1.3m in seed funding from tier one VCs of Balderton Capital, Episode 1 and Samons Investments. Since this round the company has seen over 400 per cent growth over 11 months, having facilited a further £120m of new car sales.

The company has achieved this growth with the help of its head of digital Matt Lewis and through a combination of paid search, retargeting, programmatic display and content marketing. Lewis joined the company in May 2013 after it received its seed investment, and since then the team has grown from five to 20 staff.

While the company is not able to disclose its internal financials, it is clear on the available data that Carwow, built on top of another business after identifying an even larger opportunity, is a good case study for aspiring start-ups.

It also provides testimony that if you build it, they (meaning the VCs) will come later and invest. And not just once. Carwow managed in December to raise £4.6m as its series “A” investment from the same parties who invested in the seed round.

Phil Cooper is the founder of NeonCandi. He tweets @NeonCandiMan

Join us, it's free.

Become a member to get access to:

  • Exclusive Content
  • Daily and specialised newsletters
  • Research and analysis

Join us, it’s free.

Want to read this article and others just like it? All you need to do is become a member of The Drum. Basic membership is quick, free and you will be able to receive daily news updates.