School transportation operator Zūm Services Inc. has reached unicorn status following a major funding round.
The Redwood City-based school bus operator announced Wednesday it raised $140 million in a Series E round, giving it a $1.3 billion valuation. The new funds will go toward expanding the company’s artificial intelligence platform and build an energy grid capable of putting to work "school buses that would otherwise be sitting idle in bus depots."
"This is an industry that has not changed in 80 years. It is outdated, inefficient, low technology and polluting,” Zūm CEO Ritu Narayan told the Business Journal. “This is important work that will not only improve the lives of parents, students, administrators but will also yield profound positive impacts on society."
Zūm uses software it developed to help schools share infrastructure with other nearby districts, deploy appropriately sized vehicles (busses, cars, vans), create efficient routes and adapt to families’ changing transportation needs. The company is moving toward having all its vehicles be fully electric.
During the Covid pandemic the company, founded in 2014, had made a slight transition delivering meals and computers to students' homes. Once returning to its original mission, Narayan said, the company has been driven by the voice of parents and students.
"At every point in their journey, it was consumers who told me what they wanted and where the company needed to go," she said.
Zūm currently partners with over 4,000 schools in the nation, many of which are done though school district agreements. In the Bay Area, the company has partnered with San Francisco Unified School District, Alameda Unified School District and Oakland Unified School District.
The company has a 2,000-bus fleet, according to Narayan. The company did not provide specifics on how many were deployed in the Bay Area, but the Business Journal had previously reported 200 buses and a mix of 50 smaller vehicles were specifically used for the SFUSD partnership.
Although the company has reached the coveted status of unicorn — meaning it has a valuation of at least $1 billion — it has had a few hiccups.
Last year, a community newspaper in Maryland, The Baltimore Banner, reported that the Howard County Public School System had issues with the company that left 2,400 students without a ride to school.
Zūm’s $27 million contract with the district was salvaged, but after three months of missed bus routes, late pickups and drop-offs, the company lost trust among parents and students, The Baltimore Banner reported.
Locally, Zūm’s action to accept a contract with SFUSD led the district’s former transportation provider, First Student, to file lawsuits against both organizations. The suits alleged that a former First Student employee, who Zūm hired, misappropriated its trade secrets. The cases were dropped or dismissed in the first half of 2023, respectively.
Narayan said those instances made the company stronger. "We have a customer centric approach and address any issues working with our stakeholders proactively," she said.
Investors declined to comment on Zūm’s former cases and what impact that may have had on the financing round. The $140 million Series E was led by GIC, with participation from Climate Investment, Sequoia capital and SoftBank.
Cindi Bough, managing director at Climate Investment, said Zūm’s mission to redefine transportation fleets has been a cornerstone for the firm’s most recent investment.
"We believe Zum is a story of the future; of inevitability; of convergence – where all parents know where their children are, where transportation fleets are fully utilized, and where school buses are fully electrified," Bough said via email. "We see Zum as a category leader in digitization, optimization and electrification of school district buses and fleets today; but we also believe its core technology and software platform is extensible to other types of buses, to other fleets, to other countries."
Since Zūm’s inception, the company has raised over $340.6 million in funding and has backers like the U.S. Environmental Protection Agency, Citi Ventures, Clearvision Ventures, Spark Capital, among others, according to PitchBook Data.
