Optibus taps $100M at a $1.3B valuation for its AI-based mass transit operations platform

Mass transit has made a rebound with the return of city life post-Covid 19, and today a startup that’s building tech to help it run more smoothly is announcing a big round of funding to meet the rush. Optibus, which uses AI to help public transportation bodies and their mass transit partners plan and operate their networks, has raised $100 million, funding that it will be using to continue expanding its product set and wider business footprint, CEO and co-founder Amos Haggiag said in an interview in London this week.

The Series D funding values Optibus at $1.3 billion, which the Israeli startup says makes it 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, which is brings the total raised by the startup to $260 million and is coming about 14 months after Optibus raised $107 million in a Series C at a $400 million – $500 million valuation.

That’s a big leap, but in a period where a lot of growth-stage startups have found it a challenge 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 over 1,000 cities, double the number of a year ago; and its employees have also grown to 300 (up from 120). In total, Optibus is being used to track and power about 2.5 billion trips on buses, on-street trams, light rails and subways annually around the globe. (Note: in the public transport push for more multi-modal options for users, Optibus also incorporates data about public bike, scooter and taxi access points but doesn’t provide data about their movements — not now, at least.)

Optibus’s rise underscores to a critical moment for the world of public transportation.

Mass transit services like buses and subways took a huge hit in the last couple of years, with numbers of users declining by some 80% globally in the wake of Covid-19: people stayed home more to work; when they did go out, they generally wanted to avoid contact with others and crowds so stayed off public transport; and public transport organizations themselves also reduced services and passenger flow to fit with public health rules.

That has largely come back now, with average numbers now at 80-90% of where they were pre-Covid, Haggiag said. But that’s not the full story.

Even before Covid-19 hit, he added, mass transportation use was seeing a general decline in a number of cities as people were choosing to walk, bike, and scoot — or order rides from the new wave of e-hailing taxi-type services — alongside the ever-popular option of using their own cars.

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 surge for needing more mass transit.

“By far one of the biggest demographic changes in our time and in history will be the mega city,” Haggiag said. “We’re not talking hundreds or thousands or even millions more people in in cities, but billions.”

So while Optibus is often parachuted into already-established public transportation systems — where “Everything is old tech, or just no tech at all,” in Haggiag’s estimation — it is also finding a new wave of greenfield projects in emerging markets where the mega city trend is really surging. In one example, it’s working with Kampala in Uganda to build a new bus system from scratch, he said.

This is playing into how Optibus itself is growing as a business.

The startup first made its name by way of its AI-based planning tools — used to help transportation organizations ascertain how best to manage mass transit resources against rush hours, slow periods, social distancing rules and more, which they in turn also used to share data with to customer-facing services like real-time, third-party navigation apps.

Now, Optibus is moving into a wider set of features. These include, most recently, a new analytics engine, called Ridership Insights that provides more granular data based on routes, including boarding and alighting data based on time and date, to make more informed planning decisions.

And, coming in June, it will be launching an operations stack that will give its customers an end-to-end platform for people management, and to provide real-time data and services to their drivers and other employees. This potentially will expand to include systems that replace the radio systems that bus drivers use to get updates on, say, a sudden traffic change due to an accident on the route.

Optibus is building a lot from the ground up, but it has also been snapping up smaller transport startups to bolt on new tech and services. Last month, it announced the acquisition of Portland, Oregon-based Trillium, which it acquired for around $10 million. To complement Optibus’s existing B2B platform, Trillium has built tech to provide data to passengers, used both to populate more accurate data in third-party navigation apps but also potentially for transportation operators to build and provide their own apps, by way of a white-label service.

“Transport agencies understand that most of the world uses apps like Google Maps so the first focus is to make sure that the data is super accurate for those,” Amos Haggiag. But building their own apps is a no-brainer, a way to provide more direct information and to glean more data about their customers and their usage, to sell tickets directly and more. “There is a chance to show all of that more immediately in apps,” he added.

In terms of competitors, Haggiag said that there are a number of localized players providing parts of the “tech stack” — if you could call it that — services to help monitor traffic and send out messaging to users, and ERP and CRM systems that are used by organizations but do not join up with the data showing now networks really work. Joining all of that up together is what seems to be attracting the customers.

“Optibus combines innovation and public transportation expertise like no one else 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 transportation and we celebrate this fantastic milestone with them,” said Carla Stockton-Jones, UK MD at Stagecoach Group, the largest public transport operator 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 long-time investors in the company, we’re 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 up.”

“For SOMV Momentum, Optibus represents everything that is great in tech; digitizing and disrupting the basic functions of society in a way that serves the common good, both in quality of service and environmental impact, whilst also being an island of solid growth, which is of prime importance for us in current market conditions,” added Merav Rotem Naaman, general partner at SOMV Momentum. “We are very proud to be continuing this journey with Amos and his amazing team.”

Tropic takes in more capital as demand for software procurement savings continues

Global spend on enterprise software was expected to reach $599 billion by the end of 2021, and new forecasts say it is now projected to grow 11.5% year over year to nearly $700 billion in 2022.

The average company can have more than 100 software contracts, and Tropic’s technology not only brings a click-and-approve approach to buying and managing all of that software, it also helps customers uncover savings on purchases — an average of 23%.

We last checked in on the company last August when it raised $25 million in Series A funding. The company is back six months later with nearly double the investment, a $40 million Series B round of capital led by Insight Partners, to raise a total of $65 million.

Since we spoke to CEO David Campbell, Tropic has continued its busy streak. At the time of the Series A, the company saw 100% quarter-over-quarter revenue growth and added more than 60 customers.

In the past four months, Campbell said the company more than doubled its revenue and has 150 customers, including Notion, Nextdoor, Faire and Flatiron Health. It is also up to 85 full-time employees after starting with 15 in 2021.


Image Credits: Tropic

He revealed that the new funding round took the company by surprise — the result of standard check-ins by investors — in a deal that came together quickly. He attributes Tropic’s growth to companies like his that are raising money and expanding. The global pandemic also put the need for better software procurement processes at center stage as uncertainty grew around software costs, sometimes the biggest spend behind payroll, and how to control them.

“We’ve tapped into a need that is prevalent, and awareness is growing in our space as companies try to get a handle on software spends,” Campbell added. “Procurement was traditionally led by legacy playing and initially designed for hardware, not software. However, there has been tremendous proliferation of the need in software, and with the market catching on, we have been in the right place and the right time for that.”

The new funding will go into R&D for major software elements, like automation, as the company aims to be an end-to-end procurement system of record. Campbell will also begin making key executive hires and expand in different areas across the product.

Meanwhile, the company is preparing for another product release and expansion into North America and internationally to increase the size of the market in the next two quarters.

Teddie Wardi, managing director at Insight Partners, said that when he met the Tropic team, he was “not only impressed by their vision for the platform, but how they were building the product.” He saw what they were doing as an opportunity to replace traditional pen-and-paper methods and the use of legacy platforms meant for other things than software.

“Procurement doesn’t have to be all about the cost center, but the topline driver is to reduce the time spent doing this and ensure everyone has the right tools,” he added.

Investors share how infrastructure as code is taking over DevOps

Infrastructure as code (IaC) has been gaining wider adoption among DevOps teams in recent years, but the complexities of data center configuration and management continue to create problems — and opportunities.

We surveyed top investors in IaC startups to find out more.

Overall, they see a lot of room for growth given all of the manual work still done by DevOps teams across organizations of all sizes.

However, IaC itself requires highly trained engineers to implement and manage within organizations, and there’s a shortage of software infrastructure engineers with IaC skills. This could favor IaC startups that are trying to offer complete solutions to customers.

At the same time, some large companies will continue to manage data centers internally and thus build out automation internally instead of with outside startups.

We spoke to:

Sheila Gulati, managing director, Tola Capital

Can infrastructure as code be the solution for the implementation and configuration of servers, similar to how cloud was the solution for physical servers? Which areas do you think IaC’s capability to set up any cloud resource will be most used?

The world of the modern cloud has shifted how we think about infrastructure altogether. We live in a multicloud and many-cloud world and these paradigms are redefining the modern cloud era. IaC can be used for any type of cloud workload or architecture, but it is a necessity for anyone building on the modern cloud. This is especially true for modern cloud architectures such as serverless applications, containerized applications running Kubernetes, AI/ML and more. Modern cloud architectures provide many benefits such as increased innovation, faster time to market, improved reliability and reduced costs. However, this has increased the burden of managing cloud infrastructure. The number of cloud services available is growing every year and modern architectures are composed of many loosely coupled, interdependent services and APIs. The result is that the number of cloud resources that people must manage is going up at a tremendous pace. The only way to manage this complexity is with IaC.

Today, we are seeing a new generation of IaC platforms that are designed from the ground up to meet the demands of the modern cloud. For example, Pulumi and its cloud engineering platform is helping infrastructure teams and developers tame cloud complexity by enabling them to write code in the languages that they know and love, and use software engineering practices to build, deploy and manage cloud infrastructure. In contrast to legacy IaC tools that use domain specific languages, modern IaC platforms give practitioners the full power of programming languages, which make it easier to manage the complex interdependencies of modern cloud applications. They allow developers to use existing software development tools, including IDEs, package managers and test frameworks, which enable them to build faster and reuse best practices, while testing more frequently.

Do you see IaC’s ability to streamline processes attracting startups in competitive sectors looking to get their product across the line first?

Yes. The companies in our portfolio who have embraced IaC and cloud engineering principles are also the ones most intent on rapid product development and streamlining their ability to bring new products to market faster. This requires investment in engineering talent, the platform and engineering practices.

It is important to take advantage of new cloud innovation to accelerate innovation and leverage IaC to more build products to efficiently meet customer needs. To support this it is critical for there to be partnership across providers within the IaC space to deliver the components that work together to support engineering teams.

Furthermore, we have seen teams that lean into more modern development platforms able to hire better developers more easily — a concern of every tech company today. The cultures that are more dev-forward and that are truly embracing the shift-left movement are where the best developers want to work!

Why are companies hesitant to adopt infrastructure as code? Can you outline the different ways IaC providers can market themselves to build their appeal?

IaC should be the obvious choice for any company that’s interested in delivering cloud applications at scale, reliably, and at high velocity. The concerns of the past are now obsolete. However, companies may hesitate to adopt it due to the cultural and process changes required, the risks of migrating an existing application, or they may not have the right skills on their team. In the past, we also had IaC platforms that required the use of domain-specific languages. All of this taken together can make the ramp to productivity seem steep.