RideCo, a Canadian company offering cities on-demand transit tech, closed a $15.8 million (CAD $20 million) Series A round. The fresh capital will be put toward further development of its product, which will involve substantially growing its engineering team, as well as its customer service, sales and marketing teams, according to Prem Gururajan, co-founder and CEO of RideCo.
The company, whose biggest competitor is Via, runs a software-as-a-service business model. Unlike Via — which often provides its own vehicles as well as transit planning tech from its acquisition of Remix — RideCo provides transit agencies and fleet operators with the underlying software and app so that they can, in turn, provide on-demand transit options to cities, RideCo’s biggest customer. RideCo also provides the service to corporations looking for a dynamic way to shuttle employees.
The software creates dynamic routes for buses or other types of vehicles, directing them toward the next pickup and drop-off zones depending on demand. Cities like San Antonio, Los Angeles and, most recently, Las Vegas, have used these capabilities to address access to first- and last-mile transportation, a common problem in most cities that are still mainly run by fixed-route transit systems.
“Take San Antonio, for example,” Gururajan told TC. “They’ve got certain areas of the city that are well-served by transit because they have high density, whereas there are many other parts of the city where there is low density, and they have first- and last-mile access problems. Fixed-route transit just does not work there.”
Dynamic shuttles and buses that actually go to the places where people are ordering rides and where they want to be dropped off can solve those problems and create more mobility in a city.
“So what you have now is a city where with our service, they can use dynamic transit in the medium- and low-density areas that feed into the high-frequency corridors where they have lightrail transit or express bus lanes and where they have the demand to fill up the buses.”
Passengers can view their vehicle on the app and can book rides in advance, in real time or even recurring, such as every day of the work week at 9 am.
RideCo’s Series A, which was led by Eclipse Ventures, represents the first time the company has raised institutional investment in the seven years since its founding. Gururajan attributes this to a couple of factors, the first being that RideCo spent the first couple of years heads down on building out its core technology and testing it with some beta customers to solve certain use cases.
When RideCo was ready to bring its product to market, it realized it didn’t quite have product-market fit yet.
“When we went to market, we found there were some clients interested in this, but as a whole, the market wasn’t ready yet,” he said. “They were still apprehensive about anything that was app-driven transportation, but all that started changing around the end of 2018. We had a couple of big city sign-ups, like San Antonio, that knocked it out of the park in terms of saving money for the agency and improving mobility for the residents.”
Since then, RideCo has found its way into cities across the U.S. and Canada, from big cities like Calgary and Houston to small towns like Cobourg, Ontario. The pandemic also accelerated RideCo’s growth as transit agencies began to think of new ways to flex to riders changing demand patterns and desire for modernized and responsive networks, said Gururajan.
Over the last year, RideCo’s customer base has grown 2x, although the company did not say what the base of that growth was.
RideCo is ramping up its offering of on-demand transit at a time when its main competitor, Via, is diversifying its offering and identifying more as an overall transit tech provider than an on-demand transit provider. The two companies, both of whom filed patent infringement lawsuits against each other last year for the similarities between their tech, were founded in the same year, yet Via has captured far more market share than its Canadian counterpart.
RideCo might still be able to carve out some market share in this nascent industry. Almost 16% of transit agencies in the U.S. and Canada already offer on-demand transit, and that number is expected to continue to rise with other forms of shared mobility. The company will just have to keep up its current momentum.
Correction: RideCo’s funding round was led by Eclipse Ventures; we incorrectly listed the investor as Enterprise Ventures.
