Why Smart-City Tech Startups Are A Smart Investment

By Keri Gohman

A DoorDash driver, an Amazon delivery van, and a commuter—stressed and running behind schedule—have all been circling the same block or double parked for 15 minutes when, finally, a parking spot opens up. The dangerous and unregulated parking jam that ensues belongs in “The Hunger Games,” not a modern American city.

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It doesn’t have to be this way. Politicians and city planners can do better by embracing technology to actively manage movement on streets and sidewalks.

We cannot wait to act. If our transportation and mobility infrastructure is barely at passing grade today, what happens when autonomous vehicles and more shared e-scooters and e-bikes hit the streets?

That’s why I believe investments in smart-city technology, the software that helps cities manage and optimize their infrastructures, are so critical. And I’m in good company. Venture capital money has poured into smart-city solutions: More than 900 smart-city startups have raised a combined $5 billion in recent years.

Why is now the right time to invest in startups targeting urban infrastructure? The answer, like in many aspects of life, is the pandemic.

Many cities, including New York, San Francisco and Seattle, have shuttered businesses and offices for the last 18 months, resulting in changing traffic patterns, reduced public transit ridership, and an uptick in the use of micromobility vehicles.

Transportation activity has still not returned to pre-pandemic levels, which means the coming year is a one-time opportunity for city leaders to roll out technology to change street usage, add pedestrian and bike infrastructure, better manage micromobility, improve parking, carve out permanent parklets, and more.

Just improving parking alone would be a huge game-changer. According to a recent study, motorists spend 17 hours per year searching for parking, costing $345 per driver in wasted time, fuel and emissions.

With the proliferation of new tech and modes of transportation, cities will require a holistic view of utilization as transportation evolves on the street. Today, a city may use as many as 15 different technologies to handle various parts of its mobility infrastructure, causing a massive management challenge.

Cities need unified tech platforms to gain a 360-degree view into relevant data and translate all that information into meaningful insights and action. Thankfully, much of the data is already generated by mobile applications during payment transactions, through GPS systems, traffic data and vehicle operating systems.

What would the ultimate smart-city technology rollout look like?

First, a digital mobility and data platform that processes payments would form a city’s technological foundation. All city mobility services would be run on one payment processing data platform so that the rules, rates and logic servicing the vehicles spending time at the curb can be fluidly regulated.

The platform must also be nimble enough to seamlessly plug-and-play new technologies as they evolve, such as wayfinding, in-dash communication, or apps for people with disabilities.

Consider technologies that are already part of a city’s tech stack, such as parking enforcement solutions from Barnacle, sensors that inform parking availability from Genetec, and micromobility from Lime and Spin.

While integral to a city’s mobility infrastructure, when standing alone these apps provide a limited view. One unified digital mobility platform into which all of these technologies are integrated could serve as the single source of truth where all data is aggregated.

Some cities are leading the charge in this movement. Austin, Texas, has already successfully integrated wayfinding and in-dash entertainment applications into its payment processing app.

Boston is actively investigating ways to make data-driven changes to how much curb space the city dedicates to freight trucks and individual parking spots.

Raleigh, North Carolina, uses a centralized parking and mobility platform, and has deployed parking spot occupancy sensors to integrate parking data into local policy decisions.

As cities continue to innovate, private partnerships with companies such as Passport 1 that have developed digital mobility platforms will be paramount to improved livability and urban prosperity. Other startups such as Zoba, Ride Report, VADE and StreetLight Data that provide mobility management tools and help cities build data infrastructure, will also play a role in the future of the smart-city tech stack.

While people on the street will benefit most from smart-city solutions, they won’t get a chance to experience them unless visionary city leaders act now to deploy new technology platforms.

Keri Gohman is an operating partner at Bain Capital Ventures, where she works across the firm’s fintech and business SaaS portfolios providing strategic counsel and partnering with leadership teams to accelerate business growth. Prior to joining BCV, Gohman worked in executive leadership roles at Xero, Capital One, Intuit and General Electric Financial Assurance.

Illustration: Dom Guzman