Via Raising $100 Million, Fueling Yet Another Uber Rival in U.S.by
Transportation and auto companies consider backing startup
Carpooling service competes with Uber and Lyft in NYC, Chicago
Via Transportation Inc., which offers a carpooling service in several U.S. cities, is raising $100 million to expand its presence in the hyper-competitive market for ride-hailing apps.
Investors, including Israel’s Pitango Growth Fund, Russian billionaire Roman Abramovich and Poalim Capital Markets, kicked $70 million last month into the round. The New York-based startup is in talks to secure another $30 million in the coming weeks from strategic investors in the transportation and auto industries, said Via Chief Executive Officer Daniel Ramot. He declined to name them or comment on the startup’s valuation.
Via, which operates on weekdays in Manhattan and central Chicago, teamed up with Daimler AG’s Mercedes-Benz in December to introduce its ride-sharing service to Orange County, California. Since Via started shuttling around New Yorkers in 2012, the company has tried to differentiate itself by focusing on cheaper carpooling services along heavily trafficked routes for a flat $5 fare. It pitches itself as a better alternative to subways and buses while costing less than a taxi.
However, the dominant U.S. ride-hailing companies have been pushing more into Via’s niche with their own takes on carpooling. Uber Technologies Inc. has been testing the most direct competitor to Via, a service called UberHop targeting commuters in Seattle and Toronto. Via argues that its service is more efficient because the company pores over users’ location data to generate a “dynamic bus route.”
“This is not just taking a taxi app and stuffing two more people in the car and calling it a bus line,” Ramot said in a March interview. “Our optimization and efficiency is better.”
Even with an extra $100 million to fund expansion, Via is fighting against much richer adversaries. Uber has at least $6 billion in capital, along with a $2 billion credit line, people familiar with the matter told Bloomberg last month. Lyft Inc., the second-largest U.S. ride-hailing company, said in January that it raised $1 billion from General Motors Co., and the startup is spending aggressively to steal market share from Uber. GM also acquired assets from Sidecar Technologies Inc., a ride-hailing startup that failed to keep up with the larger companies.
Via raised a previous funding round of $27 million in April 2015, an investment that was led by Pitango Venture Capital and 83North Ltd., formerly known as Greylock IL. Ramot said he believes the company can become profitable with a high volume of fares and by packing more passengers into each van, rather than by charging higher rates.
The number of Via app installs on Android phones in the U.S. grew 138 percent from September to March, compared with 42 percent growth for Uber and 34 percent for Lyft, according to data from SimilarWeb, a marketing research firm. But Via’s share of the ride-hailing market remains tiny for now.