VentureBeat presents: AI Unleashed - An exclusive executive event for enterprise data leaders. Network and learn with industry peers. Learn More

San Francisco Giants fans will be assembling in the city’s SoMA neighborhood to watch the World Series games this weekend, and many will be parking their cars — creating a perfect opportunity for on-demand valet apps like Luxe Valet.

Conveniently, Luxe is publicly launching its service today, which happens to be Christmas of sorts for the parking industry, thanks to the big games. Luxe also just announced that it has raised $5.5 million in seed funding, which it will hopefully use to prepare for the next few lack-of-parking crises.

Luxe is similar to other valet apps. You drop a pin on a map to show your destination before heading over, and a valet meets you as soon as you arrive to take your car to a partner garage. You can even track your car while it’s in Luxe’s possession and monitor its return to you, which happens within 10 minutes of a request to get it back. And just like its competitors, Luxe also has partnerships with garages around town where it leases parking spots on a variable basis.

See, Luxe is part of a very hot space right now: on-demand valet parking apps. That sounds a little ridiculous and potentially like $4 toast, but there’s actually more to it. While ride-sharing services Uber and Lyft are alleviating the commute for many of the folks without cars (as a San Franciscan, I use these more than public transportation), large numbers of people still own, drive, and need to park cars. Take for instance San Francisco, which is extremely crowded (very little street parking) and a nightmare to navigate when you’re trying to get to a parking garage. Using an app like Luxe to get someone to pick your car up wherever, park it, and return it, is certainly a welcome idea, especially if it’s done at a reasonable price.

We’ve previously reported on competing services like Zirx and Vatler in San Francisco. And ValetAnywhere does something similar in New York City. But Luxe could have the makings of a winner, despite only launching its beta test in May.

But cofounder and chief executive Curtis Lee is quite confident that his team, which is made up of several former Zynga executives and includes the man who built Tesla’s customer operations from scratch, is well-positioned to dominate the competition.

Lee dreamed up the initial idea of an on-demand valet app two years ago after almost missing his dinner reservation at Nopa, a reputed restaurant in San Francisco.

“I was there with my girlfriend who’s now my wife, and we had eight o’clock reservations. After trying to park … we got in there and barely made it — they extended the reservation time for us and I felt so bad,” Lee told VentureBeat. It’s no surprise then that starting today, the company is partnering up with three San Francisco restaurants — AQ, Stones Throw, and Alta CA — to promote the service to customers. Luxe will, in turn, let diners at these restaurants skip the waitlist (to control flow, it will waitlist folks after a certain amount of signups, at first) and get discounts on its service.

Battle of the parking apps

As I’ve written before, the parking and valet space will see the same kind of competition as the ride-sharing industry. Just as Uber and Lyft are battling it out with price cuts, driver poaching, and a race to cover the most surface area at all times, parking services will race to become available in as many neighborhoods a possible (Luxe is winning, as it currently services most of SF), offer the shortest waits possible, and have the lowest prices (Luxe and Zirx are neck-and-neck at $15 per day).

Car owners will be checking both apps and picking the one with the lowest price and/or quickest availability until one wins.

Or, according to seed investor (and huge fan of the parking drama) Semil Shah, marketing and product design could also spell victory. ​

“I believe many people who don’t live in cities but who drive into them (not in an Uber or Lyft) will benefit this valet model, so the trick for these companies is to model out where people live outside cities and then micro-target them as people who commute into cities. At the end of the day, it’s a particular suburban-to-urban transit problem, and for companies like Luxe, an opportunity,” he said in an email to VentureBeat.

Shah has used Luxe, as well as other competing services, and noted Luxe’s added convenience of dropping off and picking up his car in different parts of the city. Added services such as car washing and getting the tank filled up are also ways to tailor the service to this particular demographic, Shah said (long commutes mean more frequent gas filling).

And there are, of course, players such as SpotHero that don’t provide valets but nevertheless offer parking nearly everywhere that can be found and booked through an app, an approach we shouldn’t underestimate.

Whoever wins or whatever happens, it seems this industry has learned some important lessons from the ride-sharing market. Luxe has $1 million general liability insurance along with garage keepers’ insurance. Its peers all have some form of insurance as well. Luxe also puts its valets through rigorous screening and training.

Luxe raised its funding from Google Ventures, Sherpa Ventures, Redpoint Ventures, Lightspeed Venture Partners, Upfront Ventures, Foundation Capital, BoxGroup, Slow Ventures, Data Collective, Eniac Ventures, Rothenberg Ventures, and others.

Lee cofounded the San Franicsco-based company with Craig Martin in 2013.

VentureBeat's mission is to be a digital town square for technical decision-makers to gain knowledge about transformative enterprise technology and transact. Discover our Briefings.