$100 million for a new Uber competitor

Via Transportation lets passengers share ride details with people going in the same direction and for not much more than a bus fare

Two very bright ex-Israeli Air Force avionics developers have just raised $100 million for a high-tech gloss on an old group ride service. Founders Daniel Ramot and Oren Shoval, who have PhDs in neuroscience and systems biology from Stanford and the Weizmann Institute of Science respectively, say they are “creating the public transport system of the future,” starting in the US. Their company, Via Transportation, is modelled on the US jitneys, Israeli sheruts, Turkey’sdolmus, Haiti’s tap tap or Philippines’ jeepney.

Operating currently in just New York and Chicago, they have designed algorithms for Via that allow passengers to seamlessly share their ride with others going in the same direction. It matches multiple passengers with available seats in large SUVs or mini-buses.  Passengers request rides through a mobile app and Via’s systems instantly select, and if necessary reroute, the vehicle that best matches the route requested. The price is little more than that for a bus and heavily undercuts regular taxis and most Uber services.

Via is not just building its own fleets, but is offering its technology to municipalities to help them improve their transport systems.

Smart money seems to think that all this is a good idea and Via has just pulled in $70 million with a further $30 million to come from a strategic investor. Participating in both this funding round, and one last year for $27 million, was Ervington Investments, a Cyprus offshore Russian investment vehicle for billionaire Roman Abramovich. Also in the investment pool was Hearst Corporation, the giant US media group which over the last 20 years has been an active and successful player in new tech ventures.

 “Via’s dynamic bus system offers cities a smart solution to traffic congestion and emissions,” states Daniel Ramot in the company’s press release. The attraction as he sees it is that the system eliminates single-occupancy vehicle trips.

Unique opportunity

Another investor, Pitango Growth, a seed-corn tech fund with offices in Israel and Silicon Valley says: “...we see unique opportunities for Via to capture significant market share in the rapidly evolving transportation market.”  Its and the other investors’ money in this round is going to take Via into more US cities.

As of early May Via, which started in 2012, says it had provided over four million rides. It launched with a rush-hour only service and only within a narrow stretch of New York’s Upper East Side and Midtown Manhattan. But growth has come from the competitive advantage of its flat-rate price.

The offer is a $5 to those who pre-pay using the app, loading up with $20 -$50, and $7 for a single ride. (This is pitched halfway between a normal minimum Uber or Lyfte price of $8 and the bus fare of $2.75.) The service is built to reduce pick-up time from a corner near the passenger to under ten minutes.

Drop-offs are restricted to the coverage area.

“We think of Via as a dynamic bus rather than a private taxi you will be sharing with another passenger,” comments Ramot. Typically the vehicle carries four or five passengers, (a fact which offers safety to female riders) and sticks mainly to a rigid route.

The drivers are, at this stage at least, all professional and in New York number over 500. All hold licences from city taxi regulators and drive only black vans or SUVs. They do not rely on fares but draw an hourly wage regardless of how many people they pick up. The steady salary and low stress, compared to working for the established taxi hauling services, means that Via has become a refuge for drivers with the right vehicles. 

“We are very much focused on rethinking and engineering public transit. We looked at cities and how people in cities get around. We saw very interesting patterns, which was that cities with better transit systems have exponentially more riders and fewer residents own cars. Our conclusion was that when a city has an efficient public transit system, people choose to use it and it can displace the private auto,” says Ramot.

The US was, to them, the obvious place to start given that “so many cities don’t have an efficient transit system.” New York was an obvious first move, Via has just launched in Chicago and is now looking at Washington. Of course, Via is up against other ride services - Uber introduced UberPool to aim at this market.

No one seems as yet to be making guesses at what Via could be worth, but the likes of Abramovich obviously expect a hefty valuation at some stage in the future. Russian investors seem to like the transport sector. Uber (now valued at over $60 billion) has attracted tens of millions from Alisher Usmanov (one of Russia’s richest and who has a major stake in Arsenal Football Club) and other Russian billionaires, including Mikhail Fridman. Another, Yuri Milner, supports Indian Uber rival Ola.

Via says it moves a higher number of riders “while using a fraction of the number of vehicles used by other on-demand car services.” Making, of course, a claim for superiority.

Related Reads

comments powered by Disqus