(Bloomberg) — Via Transportation Inc.’s shared van service, like all ride-hailing businesses, was decimated at the beginning of the pandemic. It has recently begun showing signs of a rebound this year, but instead of doubling down on what has been its largest and most visible business, the company is shutting down its consumer service altogether.
On Wednesday Via plans to tell riders in its two existing markets, New York and Washington, that it will stop providing rides starting on Dec. 20. The company had restarted its van service in New York, its biggest market for ride-hailing, in July. Despite improving ridership, the ride-hailing industry has been challenged by persistent driver shortages, and giants like Uber Technologies Inc. and Lyft Inc. have spent millions to lure drivers back on the platform in order to meet demand.
In November, Via raised $130 million from investors who valued the company at $3.3 billion. It’s opting against pouring any more capital into ride-hailing, which accounted for the majority of the startup’s revenue before Covid-19, to focus solely on partnerships with public transit agencies. “Transit technology was our original vision and it’s growing extremely quickly,” said Daniel Ramot, the company’s co-founder and CEO. “It came down to focus and opportunity costs.”
Via, founded in 2012, initially set out build software for public transit systems that would allow them to provide on-demand service as an alternative to fixed-route buses. At the time, Uber and Lyft were generating significant enthusiasm by offering a private service akin to taxis, and so in 2013 Via launched its own ride-hailing service in New York, its home market.
When the pandemic flattened the ride-hailing business, it also put extreme strain on public transportation networks, highlighting the need for more efficient options. Demand for the software services that Via had initially envisioned as its core business increased as municipalities allocated more of their budgets to integrate technology into public transit.
Via now builds apps for transit agencies that allow riders to pre-book pickups, check schedules or request paratransit services. Using real-time rider and traffic data, Via’s algorithms adjust routes and schedules to dispatch vans, buses and shuttles more efficiently by pooling people traveling in the same direction into one vehicle.
The revenue stream from Via’s “TransitTech” software is more predictable than its ride-hailing business was, because contracts are long-term, Ramot said. The segment exceeded an annual revenue run rate of $100 million this year, according to Ramot. “It was this fork in the road,” he said. “If we wanted this business to return to pre-Covid levels and succeed long-term, it would take a major investment.”
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