Jake Koelln and two partners this year launched CheckNGN, an interactive car-repair application business that links independent auto repair shops and young people with used cars.
“I can change my oil,” quipped Koelln, 33, who drives an 11-year-old Mazda. “But I can’t change my timing belt.”
Koelln, who studied business and IT at Augsburg College, was able this year to quit his day job as a health care analyst to bring to market the idea he and his partners came up with in 2014.
The estimated 1.6 million car owners in the Twin Cities market spend an average of about $750 each year maintaining each vehicle. CheckNGN hopes to attract at least a sliver of that market.
The business model focuses on attracting consumers through the company’s mobile app with discounted offers for new business from independent repair shops.
The plan is to offer low — and transparent — pricing that will hopefully evolve for many into long-term business relationships for the independent shops.
“We connect people, and we’re targeting millennials, particularly women and independent shops who have some down time and have to compete with regional chain operations,” Koelln said. “It starts with a good price. And over time the relationship should evolve.”
CheckNGN research shows that many independents are willing to increase business volume by attracting new customers with inaugural discounts to keep the shop at full speed for as many hours as possible.
The new business, if the customer is satisfied, should become repeat business.
CheckNGN, which has signed up its first 20-plus repair shops, has a free mobile app in the online Apple store.
Customers and the shops achieve a transaction through a bid-and-accept process.
CheckNGN pockets 10 percent of the transaction after the repair is made and paid for.
“Our primary focus is female millenniums [18-35] who are car-not-confident and want a transparent deal on demand with a repair shop that they can trust,” he said. “People are [eventually] willing to pay a little more if they trust a process, and we look to tap into this millennial mind-set in a disruptive way [with CheckNGN] by giving users more and better options.”
Bottom line, CheckNGN covets 1 percent of the market, or about 16,000 users, which would translate to more than $1 million in annual revenue.
The partners and a couple other small investors have contributed $30,000-plus in initial capital and hundreds of hours of sweat equity.
The goal is to have the first 100 shops signed up within a few months.
Koelln said there are a few similar auto-app companies, but none in Minnesota.
CheckNGN hopes to raise up to a few hundred thousand in additional capital this year through the new online-capital raising program of MNvest that exempts small companies from much of the paperwork and regulations required of larger companies raising millions.
The company hopes to build its base to thousands of users after the first round of users gets hooked. The marketing will be done mostly with social media, including user reviews.
“We make our money when a shop executes a transaction with a user,” CheckNGN said in an investor presentation. “Only then will we take a cut of the transaction we have driven to the shop, or 10 percent. We own the entire payment process with our app platform with a third party merchant.”
Koelln said the team believes there’s enough firepower in the business model to gradually scale from a local to statewide or regional model.
The out-of-region operators who have a somewhat similar approach also are small businesses, although farther down the road than CheckNGN. They include Openbay, Repair Pal and Blitzify on the East and West Coasts.
Koelln has two partners who work part-time for the company: the firm’s president, Tony Manelli, a certified auto mechanic; and Mike Chis, a computer technology professional and software jockey.
CheckNGN was incubated by Koelln and Manelli, friends who attended Augsburg together. Manelli worked in the auto industry and now works in IT security.
Chis took the idea and baked it into the mobile app. Chis has been a corporate IT professional and software developer for 20-plus years.
There are very early signs of commercial traction, and revenue is starting to trickle in.
But the other two partners are far from quitting their day jobs, as Koelln, works full time to market the product.
“Our goal is 20 new [repair shop] customers a month,” Koelln said. “This is a product that will help consumers and locally owned repair shops. It starts with a ‘price’ and evolves into a relationship.”