What Optibus Unicorn Status Means for Transit Tech

▤ Summary

Israel-based transit software provider Optibus recently made the government technology big time by achieving unicorn status with its newest funding round.Now comes the harder part: gaining more market share as mass transit recovers from the pandemic.In May, the eight-year-old software-as-a-service company raised $100 million in a Series D funding round that valued the company at $1.3 billion — good enough for “unicorn” status, which is achieved at $1 billion.Optibus said it was the first public transportation firm to become a unicorn.Company leadership says that status matters as transit agencies around the world and in North America — where Optibus is expanding — strive to upgrade software; recruit, retain and deploy workers via the use of new technology ; explore the use of artificial intelligence; and win back riders in this new environment of remote work.“The fact that Optibus has reached such a status shows that a critical mass of public-sector players trust and believe in our product and mission, and that we are able to direct a significant amount of private investment toward public services and the mitigation of industry challenges,” said Amos Haggiag, CEO and co-founder of Optibus, in an email interview with. Other unicorns in the government technology space include Tyler Technologies , Granicus, Mark 43 and OpenGov , according to industry experts and financial sources.The reasons for such growth?According to Cook, the industry is maturing and has more larger businesses than was the case five years ago; consolidations have helped tech providers scale more quickly; and variation multiples “grew meaningfully last year, and so high valuation multiples on a larger base of revenues created a perfect storm of sorts to establish a class of unicorns last year.”While Optibus can enjoy the pride that comes from being a unicorn, it’s not as rare as it once was, and might not even qualify as massive news anymore, given those recent trends, Cook said.No matter the significance of the Optibus unicorn status, its new capital and the attention it is receiving — $260 million total thus far — comes at a vital, perhaps existential time for mass transit, especially in the United States.Ridership fell to 20 percent of pre-pandemic levels in April 2020, according to the American Public Transportation Association (APTA), but has since recovered to “slightly more than 60 percent of pre-pandemic levels,” with that growth determined by the health of local economies, service delivery and reliability, as well as other factors.Ridership also grew when college students returned to classes last fall, though new COVID variants — which kept riders and transit workers at home — and the ongoing labor shortage also can serve to dampen use of mass transit.In fact, APTA found that 92 percent of transit agencies are having problems with hiring, with bus drivers being the hardest jobs to fill. “Moving forward, transportation agencies and operators must embrace a more agile approach to public transit to meet changing market demands and the higher expectations of their riders. The development and sale of such technology show where the transit world might be headed in general, according to Haggiag, the company’s CEO.“I think the takeaway for planners and schedulers was that faster, smarter tools are not only relevant for special or emergency circumstances,” he said. “They provide value in tackling larger, systemic challenges facing the industry.”Another area of growth for sellers of transit technology also will come from data, he said.“Data-driven planning is the future, and already part of our present,” Haggiag said.

▦ Linked Companies

Optibus

$1M to $5M