Sparesbox raises funds to end mechanics' dark arts and rip-off car parts prices

"There is a lack of transparency in that market about what parts really cost and various other things related to what work might need to be done. We are part of the emerging 'do it for me' market, we are using technology to demystify the process and provide parts that are suitable for vehicles at a reasonable price."

Mr Saliba said official manufacturer dealerships were the worst culprits for over-charging for parts, and often incorrectly led customers to believe that they had to buy parts through them in order to retain their vehicle warranties.

He said this had no legal basis, and that customers could get parts from exactly the same suppliers through Sparesbox, often for less than half the price.

Sparesbox is one of an increasing number of online marketplaces to attract venture funding in recent times. The model is most famous internationally with the likes of Uber, Airbnb and eBay, but high-profile local examples include Freelancer, Airtasker, Redbubble and DesignCrowd.

Carthona Capital principal and Sparesbox chairman Dean Dorrell said investors liked the marketplace model because they are hard to build, but once established have a natural "moat" around them, meaning those in sectors with an established large market could be hugely successful.

He said there was enormous growth potential for Sparesbox, and believed its move to diversify away from pure e-commerce to real-world servicing was smart.

Sparesbox had been consistently receiving questions from customers about whether they could fit the parts for them, he said, and believed there would be a big demand for the new services.

"While a fantastic business has been built in becoming Australia's biggest online auto parts retailer, most people want their car serviced or repaired by someone else," Mr Dorrell said.

"The problem is the industry is broken, we all know we are being ripped off habitually, whether it's huge mark-ups on price, work done unnecessarily or without prior approval. It is one of the last industries that is still opaque and where you can't Google and find out the right price – until now."

Moelis' VC Fund acquired approximately 10 per cent of Sparesbox in the raise and Moelis Australia Asset Management managing director Andrew Martin said its fund was entirely for investors under the Significant Investor Visa (SIV) program.

The government changed the SIV investment rules in July 2015 to require at least 40 per cent of every $5 million investment to be placed into venture capital and growth equity in smaller Australian private and public companies.

Moelis has $1 billion of assets under management under the SIV program, and Mr Martin said it was proving a good way to attract successful business migrants with significant capital into Australia.

"The investment in Sparesbox demonstrates the effectiveness of the Commonwealth government's SIV program in supporting innovative Australian growth companies and their ability to create employment opportunities, and incrementally contribute to the economy," Mr Martin said.