Zeelo — a ‘smart buses’ platform providing bus operators, employers and schools with private bus and shuttle transport programs — has secured $14 million in a fresh Series A ‘extension’ round of funding. The new investment was led by FlatzHoffmann (a European growth equity investor) and was joined by IREON Ventures (the CVC arm of Motor Oil Hellas), and an unnamed Boston-based family office.
Zeelo now plans to accelerate sales and U.S. operations on the East and West coasts, as well as work on its tech platform.
A company spokesperson clarified that this round is an equity-based extension rather than a Series B or growth equity round because – based on its growth in the U.S. – the company plans to attract U.S. lead investors for its next stage of funding.
Until this point, Zeelo has ‘been through the wringer’ somewhat, after having to abruptly reverse out of an acquisition by mass transit group Swvl, which itself had fallen foul of the massive devaluations in SPACs. The lauded $100 million buyout was only announced three months prior to that.
Last year, Swvl, an Egyptian-born startup that provides shared transportation services for intercity and intracity trips, laid off 50% of its remaining headcount. The 99% stock tumble it took after a SPAC merger might have had something to do with it.
That said, while Swvl agreed to terminate the acquisition of Zeelo, it had already committed to a $5 million convertible promissory note for Zeelo, which the latter managed to retain.
Prior to all that, Zeelo had raised $19.6 million from investors such as ETF Partners, InMotion Ventures and angels. At pre-seed the company raised $1.6 million and then a seed of $6 million. Its Series A part 1 was $12 million, then the above Series A extension of $14 million. That makes its total Series A $26 million, with the total funds raised standing at $33.6 million.
Outside of the U.K., Zeelo now has a second headquarters in Boston, and co-founders Sam Ryan and Barney Williams have fully relocated to the U.S. It now has contracts with Fidelity and some unnamed large enterprise clients.
After a tumultuous 2022, Ryan, who is also Zeelo’s CEO, told me, the company was “thrilled” when it managed to get the Series A extension, especially in the current market: “But the underlying growth of business even through last year has been really strong.”
I asked him what has been fueling the business. In short, it’s down to both the lack of public transport options in the U.S. and the cost of living crisis: “Our business… works very well in places where there’s limited public transit, where people are car dependent. A lot of our customers are in manufacturing, distribution and warehouses where a lot of workers can’t afford cars. It’s a big issue outside of London, but it’s pretty much an issue everywhere outside of Manhattan.”
He said there was a “big increase in demand when fuel prices increased, because employees were becoming noisier about the cost of their car.”
He added that although there is spotty competition there is a large and ready market in the U.S. for this model: “On a deal by deal basis we rarely bump into anybody. There is some competition but given the size of the market, the whole thing is wide open.”
Christopher Hoffmann, Partner at FlatzHoffmann, added in a statement: “Zeelo is a unique and proven mobility player headquartered in Europe with a strong expansion push to the US. It combines a strong transit-tech platform with a clear sustainability mission.”