Mass transit has seen a resurgence with the return of city life after Covid 19, and today a startup building technology to make it run more smoothly is announcing a major round of funding to help absorb the crowds. OptibusUsing AI to help public transit agencies and their transit partners plan and operate their networks, has raised $100 million, funding it will use to continue expanding its product portfolio and broader business footprint, said CEO and co-founder Amos Haggiag in an interview in London this week.
The Series D funding values Optibus at $1.3 billion, which the Israeli startup says is the first “unicorn” in the public transportation tech space.
Insight Partners, Bessemer Venture Partners, Verizon Ventures, Pitango First & Pitango Growth, Tencent, SOMV Momentum are among the investors in this round, bringing the startup’s total to $260 million and about 14 months after Optibus raised $107 million in a Series C with a valuation of $400 million – $500 million.
That’s a big leap, but at a time when many growth-stage startups found it challenging to raise more money, Optibus stands out as an example of how the right mix of timing and traction can still close deals.
The company now has customers in more than 1,000 cities, double the number a year ago; and its employees have also grown to 300 (versus 120). In total, Optibus is used to track and power approximately 2.5 billion journeys on buses, trams, light rails and metros around the world every year. (Note: In the push of public transportation to provide more multimodal options for users, Optibus also includes data on access points for public bicycles, scooters, and taxis, but doesn’t provide data on their movements — not now, at least.)
The emergence of Optibus underlines a critical moment for the public transport world.
Mass transit services such as buses and subways have taken a huge hit in recent years, with the number of users worldwide falling by some 80% in the wake of Covid-19: people stayed at home more to work; when going out, they generally wanted to avoid contact with others and crowds, so they stayed off public transport; and the public transport organizations themselves also reduced services and passenger flow to comply with public health regulations.
That has now largely returned, with average numbers now at 80-90% of where they were before Covid, Haggiag said. But that’s not the full story.
Even before Covid-19 hit, he added, mass transit use saw an overall decline in a number of cities as people chose to walk, cycle and scooter — or order rides from the new wave of e-hailing taxis. like services — in addition to the ever-popular option to use their own car.
But at the same time, he added, cities are growing, with the concept of “mega city” becoming more common and… more mega, and that is playing out in a wave of need for more public transport.
“By far one of the biggest demographic changes in our time and in history will be the megacity,” Haggiag said. “We’re not talking about hundreds or thousands or even millions more people in cities, but billions.”
So while Optibus is often dropped into pre-existing public transit systems — where “Everything is old technology, or no technology at all,” according to Haggiag’s estimation — it’s also finding a new wave of greenfield projects in emerging markets where the mega-city trend is really soaring. In one example, it is working with Kampala in Uganda to build a new bus system from scratch, he said.
This responds to how Optibus itself is growing as a company.
The startup first made a name for itself through its AI-based scheduling tools — used to help transportation organizations determine how best to manage public transit resources against rush hours, slow periods, social distancing rules, and more, which in turn also used to share data with customer-facing services such as third-party real-time navigation apps.
Now Optibus moves to a wider range of functions. These include, most recently, a new analytics engine called Ridership Insights, which provides more detailed data based on routes, including entry and exit data based on time and date, to make more informed planning decisions.
And in June, it will launch an operations stack that will provide its customers with an end-to-end platform for people management and to deliver real-time data and services to their drivers and other employees. This may be expanded to include systems that replace the radio systems used by bus drivers to receive updates about, for example, a sudden change in traffic due to an accident on the route.
Optibus is building a lot from the ground up, but it has also picked up smaller transportation startups to tap into new technology and services. Last month, it announced the acquisition of Portland, Oregon-based trillium, who acquired it for about $10 million. Complementing Optibus’ existing B2B platform, Trillium has built technology to provide data to passengers, which is used both to populate more accurate data into third-party navigation apps, but also potentially for carriers to build their own apps and through a white-label service.
“Transport agencies understand that most of the world uses apps like Google Maps, so the first focus is making sure the data for them is super accurate,” Amos Haggiag. But building their own apps is a no-brainer, a way to provide more immediate information and collect more data about their customers and their usage, to sell tickets directly and more. “There’s a chance to show all that more directly in apps,” he added.
In terms of competitors, Haggiag said there are a number of localized players providing parts of the “tech stack” — if you could call it that — services to monitor traffic and send messages to users, and ERP and CRM solutions. systems used by organizations, however, do not match the data showing that networks actually work. Putting it all together is what seems to attract the customers.
“Optibus combines innovation and expertise in public transport like no other in the industry. Their software is revolutionizing our business and day-to-day operations, as well as the passenger experience. Optibus is the future of public transport and we are celebrating this fantastic milestone with them,” said Carla Stockton-Jones, UK MD at Stagecoach Group, the largest public transport company in the UK, in a statement.
“Optibus has modernized the industry and helped cities around the world bring quality and reliable transportation to their residents. As longtime investors in the company, we are excited to continue our partnership with Amos and the team,” said Teddie Wardi, MD at Insight Partners in a statement. “We look forward to working with Optibus as they continue to grow and scale.”
“For SOMV Momentum, Optibus represents all that is great in tech; digitizing and disrupting the basic functions of society in a way that serves the common good, both in terms of quality of service and environmental impact, while also being an island of solid growth, which for us is one of the greatest importance in the current market conditions,” added Merav Rotem Naaman, general partner at SOMV Momentum. “We are very proud to continue this journey with Amos and his amazing team.”