SoftBank gives school bus startup Zūm a ride to near unicorn status

Yes, Zūm is a school transportation company. But it’s also a tech company that wants to upend a convention—carrying students from home to school and back again—that has hardly changed in decades.

Zūm is betting that it can lower costs for school districts by providing them with tech for managing the use of their buses. Eventually, the company hopes to introduce better buses for schools that run on electricity rather than diesel.

Japanese investing giant SoftBank has seized on the company’s message. On Tuesday, Zūm said it had raised $130 million in Series D funding led by SoftBank’s Vision Fund 2, valuing the business at about $930 million. Other investors in the round included Sequoia Capital and BMW i Ventures. Andrew Straub, a SoftBank investor, will join Zūm’s board.

Founded in 2016, Zūm’s software helps school districts plan bus routes and lets parents track where their kids are as they travel to school. The company can also provide schools with buses and smaller vans—rented from manufacturers—that it staffs with vetted drivers. 

Zūm CEO Ritu Narayan says her company’s technology can help school districts lower the overall cost of transportation because they can more easily determine if routes with fewer students are better suited for smaller vans rather than diesel-guzzling, multiton school buses. And if a student is sick, parents can alert Zūm, allowing the driver to take a shorter route and bypass the stop entirely.

“There’s a lot of the one-size-fits-all model in school buses where it doesn’t matter if it’s one kid going or five kids going,” says Narayan. “We have disrupted this business model by using a mixed-size fleet. The school bus is a great solution for most of the use cases, but there are 20% to 30% of cases that aren’t solved by school buses.”

While the Redwood City, Calif.–based company suffered amid pandemic-induced school closures, revenue has bounced back as schools have reopened, says Narayan. In July, the San Francisco Unified School District awarded Zūm a $150 million, five-year contract to manage its student transportation after the Oakland Unified School District had signed a $53 million, five-year contract that started in 2020.

Regardless of its recent customer wins, Zūm’s funding could not have come at a better time. The company has an ambitious goal of leasing 10,000 electric vehicles by 2025.

The question is whether school districts will bite. Narayan argues that having a fleet will let the company expand the transportation it provides beyond just school-to-home trips. Rides for field trips, athletic meets, and after-school programs are also possible.

She also notes that the shift comes as the Biden administration makes climate change a key part of its platform. As part of the $1.2 trillion bipartisan infrastructure bill, $7.5 billion was earmarked to help replace diesel-powered school buses and ferries with electric counterparts—though that bill has stalled in the House. While Zūm doesn’t expect to directly receive some of those dollars, it does believe Biden’s plans will reduce the cost of electric vehicles in general, which in turn, could lower the cost of Zūm’s future leases. Meanwhile, when school districts are considering renewing contracts with other school bus providers, they may turn to the startup’s electric fleet instead, says Narayan.