Why We Invested in Optibus: Digitizing to electrify public transportation globally
By Brian Walsh, Head of Wind Ventures
The public bus transportation market is large, complicated, and primarily managed by “old tools” such as Microsoft Excel
The public bus transportation market is large, complicated, and primarily managed by very dated tools. In terms of size, the global public transportation market is measured at over one trillion dollars and grows almost three percent each year. Buses make us over one-third of this. The market is best described as “very complicated,” primarily because it involves government agencies for planning and separate, usually private, stakeholders as operators who own and manage the buses and employ the drivers. It is a highly heterogeneous market, with every city having its own set of rules and regulations. The net impact is a high level of inefficiency with a very low level of technology adoption. To this end, sixty percent of the market uses manual processes for managing buses and drivers, and the primary tool supporting this way of work is what you might guess — the convenient yet limited Microsoft Excel spreadsheet.
The sector is undergoing a foundational change to adapt to new mobility realities, causing significant consequences and requiring digitization to solve effectively
Today, the sector is undergoing foundational change due to demand and supply changes. On the demand side, rider patterns have whipsawed since the start of the global pandemic. Twenty percent of pre-pandemic demand is still largely at risk today due to work-from-home policies and more e-commerce deliveries also keeping people home. This lower demand equals lower operating income, putting significant pressure on operators. On the supply side, the labor market for bus drivers is deteriorating. Twenty percent of open bus driver positions remain unfilled across Europe and many working drivers today are near retirement age. For example, fifty-five percent of bus drivers in Germany should retire by 2026. This, of course, puts more demand on working drivers, which increases burnout while decreasing the rider experience. Add into the mix labor union strikes battling inflationary pressures on driver wages and mandates for electric buses that add new constraints and complexities, and you have a significant problem.
The consequences of this are significant and include:
· Poor management and visibility into critical KPIs;
· Poor service quality;
· Months-to-years to make improvements; and
· Increased subsidies or fares for riders.
We believe Optibus to be the leading digital operating system for public bus transportation systems globally and a key enabler to accelerate the sector’s electrification
Digitization is the clear answer to these challenges and, in our view, Optibus is the leading global end-to-end digital operating solution for the public transportation bus market. As a result of Optibus’ attractive “software as a service” model, customer case studies are plentiful and geographically expansive.
Digitizing public bus transportation systems is a highly complex, large-scale problem that requires quick optimizations on, at least, a daily basis. The sector’s primary management tool — Microsoft Excel — breaks when attempting this. Other digital platforms exist but require hours or more to run an optimization and usually are not genuinely end-to-end, which is essential. Regarding optimization speed, our estimates put Optibus in a highly advantaged tech-enabled position. It is distinctive and really “unfair.”
Electrification is another layer of complexity and is becoming more important to bus operators worldwide. Optibus’ end-to-end, quick-to-deploy solution and ‘unfair optimization speed’ are vital keys to accelerating the world pragmatically and realistically towards electric zero emission buses.
WIND Ventures is excited to join Bessemer Venture Partners, INSIGHT Partners, and many others in supporting Optibus’ global growth in enabling efficiency, electrification, cost savings, and improving rider experiences while accelerating growth within the Latin American markets.
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About Brian Walsh
Brian Walsh leads WIND Ventures in San Francisco — the strategic venture capital group for Copec, which is a leading energy and retail corporation throughout Latin America and the United States. Brian has two decades of venture capital experience in the San Francisco Bay Area, both in private and strategic venture capital. Most recently, Brian was an Associate Partner and Senior Expert at McKinsey&Company where he led the Firm’s corporate venturing advisory efforts with global Fortune 500 CEO clients. Brian holds an MBA from Massachusetts Institute of Technology (MIT) and a BS in Physics from Tufts University.
About Copec WIND Ventures
Based in San Francisco, Copec WIND Ventures is the strategic venture capital (CVC) arm of Copec, one of the leading energy companies in Central and South America and one of the most valued brands throughout Latin America. WIND Ventures leverages Copec’s significant resources to accelerate growth, primarily within Latin America, for startups and scaleups across the world within the new mobility, energy and retail sectors. Visit windventures.vc or follow us on Linkedin and Twitter.
