Venture investors continue to pour money into apps that challenge conventional transportation businesses.
Via Transportation Inc. in New York is the latest to attract funding in the category, with a $27 million Series B round led by Pitango Venture Capital and joined by Hearst Ventures, Ervington Investments and the startup’s earlier backers 83North (formerly Greylock IL).
The Series B round brings Via’s total funding raised to $37 million to-date.
The 30-employee startup plans to use the capital for hiring, marketing and expansion of its app and service beyond New York City said co-founder and Chief Executive Daniel Ramot.
Via currently operates in Manhattan only. It is a ride-hailing app that groups up to five passengers who are heading in the same direction, and sends a professional driver in a sedan, SUV or van to pick them up 10 minutes, and drop them off together. Rides cost $5 or $7, and the company doesn’t use surge pricing or metered fares.
Via is among the many tech ventures offering nontraditional transit options, including ride-hailing pioneers Uber Technologies Inc., Lyft Inc. and Sidecar Inc.; newer shuttle-type services such as Leap Transit Inc., Loup Inc. and Chariot; and apps that facilitate paid carpooling like Carma and BlaBla Car.
Undaunted by a crowded market, Mr. Ramot said that Via differs from other ride-hailing apps, in part, because the company doesn’t engage in surge pricing. Riders are assured of the flat fee they will pay for a ride within a given city zone, more like a bus ticket or subway fare.
He also said Via is more appealing on the “supply side.” Drivers, licensed transit professionals and who work as contractors for the company, don’t have to worry about how many fares they get in a shift. They are paid by the hour.
Pitango Venture Capital Managing Partner and co-founder Chemi Peres said he sees “fixed prices even at times of high demand,” as a point of appeal for Via users, along with the convenience of the rides, and friendliness of the shared ride experience.
The investor said the company doesn’t have to “conquer the globe,” to deliver venture-worthy returns to its backers. He expects Via to “focus on execution” covering New York’s busiest neighborhoods first.
However, the CEO confirmed that Via plans to expand beyond New York to major cities like Washington or Chicago, potentially by the fall.
Darcy Frisch, vice president of Hearst Ventures, said that Via also stands to become something of a technological backbone for municipal transit services that want to use “dynamic routing” as well.
A bus or train service in a smaller town may be able to save lots of money, she believes, by using the company’s system to see when and where passengers are building up and need a ride, and then dispatching vehicles there instead of having them run around the clock, sometimes empty.
Ms. Frisch also said now that Via is well-capitalized, she expects it to “pour fuel on the fire,” of its early traction in New York with some marketing and advertising efforts. To-date, Via says that its app has 40,000 registered users, with more than half having paid for at least one ride.