By Pierre Cordelle, Senior Associate at Aster, and Charlotte Labauge, Analyst
Aster recently invested in Karos, as the company raised a €4.2m seed round, alongside with Alto Invest, Aglaé Ventures, Financière Saint James and business angels such as Xavier Niel, Franck Le Ouay and Charles Egly. The capital inflow will enable the company to accelerate its growth.
Karos is a short-distance carpooling application, mainly focusing on daily trips in suburban and rural areas. It enables commuters to have access to a convenient, affordable and sustainable mobility solution. The company has proven that an intelligent matching of demand and supply thanks to artificial intelligence technologies creates a high-quality and smooth experience.
Why do we believe that Karos has the potential to deeply transform the way people commute around cities?
A need to redesign existing public transportation systems
Public transit systems are highly subsidised in France. Local authorities support 60 to 75% of the budget, while the rest is paid by the end-users. These incentives have enabled the development, in most large cities, of a very high-quality mass transit network. The design of a mass transit network that brings a high quality of service while enabling a low environmental footprint of commuters at the best cost is a challenge in any case: the estimation of flows before creating the infrastructure is uncertain, and the evolution of the flows over the years is rarely compatible with the lack of flexibility of the infrastructure. Therefore, some lines are over-crowded (try Line 13 in Paris at 8.30 in the morning if you want to experience it), and some lines are under-optimized in suburban and rural areas, either with an important passenger cost/km, or with a quality of service that does not match commuters’ expectations.
Private companies want to be part of the game
Local authorities used to organize the shared mobility: from the traditional tramways and buses to the more innovative bike sharing systems, they do not generally operate the services but grant companies such as Transdev or JC Decaux a right to do so.
Start-up companies are changing the game: Chariot created several private and flexible bus lines in San Francisco (and got acquired by Ford), CityMapper launched its own bus line in London, Ofo and Mobike have deployed millions of free-floating bikes around the world, and the new kid in town, Bird, deploys thousands of e-scooters in California.
Sometimes operating in a grey zone from a regulatory point of view, they all have the same motto: customer-centric (convenience for the commuters), and VC-backable (infrastructure-light if not asset-light).
Among them, a few short-distance carpooling platforms.
Karos, driving the growth of short-distance carpooling
Historically, there has been several attempts in the carpooling space but only few of them eventually succeeded. For the record, Blablacar was actually launched as a short distance carpooling app and then pivoted to long distance trips. In theory, daily carpooling offers obvious advantages: less congestion, less greenhouse gas emissions, more flexibility for commuters. However, such initiatives used to be hindered by cultural, financial and technical barriers, including the lack of trust in the network, the lack of liquidity – usually leading to the desertion of the platform –, and the low attractiveness for drivers.
We believe such barriers can be overcome thanks to a tech-enabled great customer experience and the support of enterprises and local authorities; both at the core of Karos’ ambitious project.
The company already provides a seamless and flexible in-app customer journey, based on in-house algorithms that learn your habits and only suggest the most relevant commuters. It also integrates intermodality options, which makes the application even more valuable.
Finally, we believe in the alignment of interest of enterprises and local authorities with Karos, to promote the app as an alternative and complementary offer to their transport networks. Karos has already proven its value through a proof of concept that was recently experimented in the Paris region, alongside Ile-de-France Mobilités. The application has experienced a tremendous growth over the last 9 months (8% weekly growth in active users), attracted thousands of daily users and captured 50% of the market share. Many cities and regions think about similar projects, and the financing of short-distance carpooling is expected to be a key topic of the Mobility bill, expected to be approved in the coming months.
Such a company, transforming the mass transit ecosystem with a digital and community-driven experience fits perfectly with Aster’s model. Our goal and mission are now to act as a catalyst thanks to our ecosystem of industrial partners to facilitate Karos’ geographic expansion in France and abroad.