The Laundromat business might not seem ripe for a multimillion-dollar technology infusion. A Tampa entrepreneur has different ideas.
Company. Washlava. Industry. Technology. Key. Entrepreneur looks to disrupt the coin laundry business.
Todd Belveal recently bought a coin laundry business in Carrollwood as an investment for $68,000.
He was initially interested in the business because the stores have good cash flow, he says. Revenues have tripled to roughly $150,000 since he bought the location.
But the Laundromat investment for Belveal, a technology entrepreneur who previously founded a niche mobile app for renting cars that raised $25 million in investor capital, has since turned it into something bigger.
Six months after he purchased the store, a burglar ripped the quarter machine out of the wall with a crowbar. And when it is time to collect the quarters, Belveal realized how time consuming the business can be. You have to empty the machine, transport all of the quarters and get them counted.
Yet he liked the profitability in the industry. So he thought of ways to remove the stress — for Laundromat owners and customers. “I thought, 'Someone has to have an app for this,'” he says. “Nope.”
That's how Belveal founded Washlava, a company that developed a mobile app to automate the payment process at Laundromats. The app works in connection with a proprietary board that gets placed inside of every washer and dryer, Belveal says.
“We bring the technology,” Belveal says. “The owner brings the store and all of the equipment.”
Along with taking quarters out of the mix, the Washlava app can reserve machines, unlock the doors and include dynamic pricing. “It makes it an easier experience for everyone involved,” Belveal says. “It allows the owners to essentially run the business on their phones.”
Belveal wants to perfect the technology before the company goes live with the app. Washlava completed a $1.8 million investment seed round this past summer. It used the funds largely for research and development. Belveal says future investment will be necessary to grow the business.
The technology is ready for beta testing, Belveal says, in a pilot program with a local university. Washlava has partnered with a company that does laundry services for college campuses and is in the process of choosing a university. He says it will last the semester and the company will then go live in the first quarter of 2017.
Belveal has big plans and goals for Washlava.
He developed a list of the top 20 markets for Washlava, based on cities with the most coin laundry facilities. Austin, Texas, where he built Silvercar, his last mobile app business, is the top market on his list. Other markets include Washington, D.C., and New York City. Despite the Tampa headquarters, no cities in Florida are on the top 20.
Belveal targets three customer levels with his business-to-business model: payment only, powered by Washlava and fully branded Washlava stores. Each level offers different features based on the store's quality, cleanliness and commitment level.
Payment-only stores don't need to meet Washlava's standards, but will only have access to an unbranded app that collects payments. The coins will be taken out of the equation, but nothing else.
Powered by Washlava clients, says Belveal, must be clean, high-quality Laundromats. Stores will have access to the Washlava app, including its automated payments, dynamic pricing, marketing support and more. These stores, he adds, can keep their personal brand and don't need to use the Washlava name.
But meeting cleanliness and high-quality standards is crucial. “We will have financing options for owners to improve their stores,” Belveal says.
And with those improved stores, the third option is to become a fully branded Washlava Laundromat with the app and all of the features. The technology can essentially convert these locations into smart stores, where the technology on the locked door picks up users locations and unlocks for them, Belveal says. The app can even notify customers when their laundry is finished.
Other potential Washlava clients, Belveal says, are college dorms and hotels.
Washlava will collect a percentage of each transaction at branded locations. Branded partners will make up 75% of Washlava's revenues, he says.
The other 25% of revenues will come from its own units, Belveal says. He plans to have at least 100 corporate-owned stores, including the first one in Tampa that will open this fall for beta testing. The Tampa store is a roughly $250,000 investment, Belveal says.
The beta store will give him an opportunity to test his technology firsthand and allow him to experiment with other possible revenue sources. Charging customers a flat fee to fold clothes is one option.
Roughly one in every six U.S. households uses Laundromats, Belveal says, totaling about 19 million homes. The Laundromat industry as a whole is valued at $6 billion, he says.
For Washlava to be successful in the big industry, he says it has to maintain a tight focus. Keeping that narrow focus, however, doesn't mean Belveal expects revenues to suffer.
According to Washlava's five-year plan, it will have 2,000 affiliated stores by 2022, Belveal says. “That's less than 10% of coin laundry stores in the country,” he says, adding that Washlava would need to surpass 2,600 stores to reach 10% market share.
With those stores factored in, and other clients such as universities and hotels, Belveal projects Washlava's proprietary tech board will be in 400,000 machines by the end of that same five-year period. “At that point, revenues would be north of $100 million,” he says.
The biggest challenge the company faces to reach the lofty goals, says Belveal, is securing investment capital. “You have to invest what you have,” he says, “and you have to time when you want to add new features.”
The company is currently seeking at least $3 million — Belveal expects to raise more than that — in a series A round to continue its progression. And with the current schedule, he projects another capital raise round sometime in 2018.
Belveal started his business career in a place far from Laundromats — with high-end jewelry store Tiffany & Co. He worked in store development, retail operations and human resources at Tiffany. He later worked for several management and business-consulting firms, focusing on retail and consumer behavior. That includes stints with Accenture, The Parker Avery Group and Boston Retail Partners.
That led Belveal to launch Silvercar, which stems from some personal frustrating traveling experiences. The Austin, Texas-based mobile app company allows users to reserve and rent a car from a fleet of silver Audi A4s.
Silvercar is based on a similar user-focused concept to Washlava. Founded in 2012, it raised $25 million from investors in two years. The company bills its service as airport car rental, re-imagined. It currently operates at 13 major airports nationwide. “Silvercar is sexier, but it's a rental business,” he says. “Washlava is for business owners. If you own a Laundromat, all you need is Washlava.”
Belveal expects to replicate the fast-paced growth curve with Washlava, but the beta testing is imperative. “Once the technology is good,” Belveal says, “the business will scale quickly.”