Rideshare tech startup gets $15 million to reroute emissions
The Routing Company, a Boston-based software startup that makes on-demand routing technology for public transit agencies, raised $15 million in Series A funding.
Why it matters: Reducing single-use vehicle trips remains an easy way for individuals to reduce carbon emissions, but public transit is an inconvenient and often inaccessible alternative for people living in underserved neighborhoods.
- But the combination of slashed transit agency budgets and reduced service after ridership declines during the pandemic make this "easy" solution look like much higher hanging fruit.
What's happening: Galvanize Climate Solutions, Tom Steyer's new climate-focused VC firm, led the round. SYSTEMIQ, a London think tank, also participated in the round.
- James Cox, CEO of The Routing Company, declined to disclose the valuation of the round.
The big picture: Cox is the former head of Uber Pool, a budget ride option that matches several passengers in a single vehicle based on departure and destination locations.
- Uber Pool was never profitable, Cox tells Axios, and the economics of large-scale ridesharing never could meaningfully bring down prices for riders and reduce the number of cars on the road.
How it works: Working off new research from MIT, The Routing Company has developed software designed to optimize routes for 18-seater city commuter buses. It's currently available for Seattle's King County Metro riders.
- The Routing Company picks up and drops off riders at transit hubs like high density bus or train stops.
- It sells directly to transit agencies that then set the prices for riders. People can call a city commuter bus on-demand via an app called Ride Pingo.
- Currently, all buses on The Routing Company's software are traditional transit buses running on gas or diesel, but have accessibility features like ramps that private vehicles often lack.
- Buses are all provided by the local transit agency and the drivers work for the agency.
Yes, but: This is not the first startup wanting to disrupt public transportation.
- Leap, a bus service startup in San Francisco, shut down in 2015 after raising $2.5 million in seed funding.
- Shuddle, an Uber-for-kids startup in San Francisco, shut down in 2016 after raising $12.2 million in seed and Series A funding.
- Chariot, a crowd-based shuttle service in San Francisco, was purchased by Ford in 2016 for $65 million, but shuttered entirely in 2019.
The bottom line: Creating a software business is much easier than a true overhaul or replacement for public transit. Cox says he has learned from his past mistakes and intends to work with transit agencies instead of against them.
- "You still need a product like this, whether it's us or not, to get to carbon-zero transportation, otherwise it's a dream. You need an efficient and convenient way of moving people, or people will continue to choose their car," Cox says.