The kids’ ride sharing service Kango scored $3.6 million in Series A, the company has announced. National Express, a transportation firm that operates a fleet of more than 25,000 vehicles and serves 600 school districts in 30 states, led the round.
As part of the agreement, David A. Duke, CEO emeritus of National Express, is joining Kango’s board.
The funding announcement comes in the wake of the recent $40 million secured by another child ride-sharing service, Zum, and demonstrates growing investor appetite for services that shuttle kids around.
Additionally, the raise shows how the fledgling sector is expanding from an Uber-like private mobility service into the school transportation market. Around 23 million school-age children between kindergarten and 12th grade get to school by car each day, according to Duke.
Although it’s difficult to place a dollar value on the potential market, Duke said the rideshare space overlaps with the child care market, valued at around $43 billion, and the school transportation market, which clocks in around $24 billion.
“We think this is a huge space,” Duke told FreightWaves. “We think Kango taps into a growing and unmet need in that marketplace, and frankly we’d like to be part of it.”
Kango will use the money to expand geographically and grow partnerships with school districts, said co-founder and CEO Sara Schaer.
“To date we have prided ourselves on being the best service for kids and families,” Schaer said. “This partnership with National Express will allow us from a funding and strategic perspective to expand to expand service offerings to schools as well.”
Founded in 2012, Kango is an app-based rideshare and childcare service for families, providing rides to get kids wherever they need to go. The minimum cost per ride is $16.
In addition to filling a niche for working parents who need to get their kids to and from a wide variety of after-school activities, the company partners directly with schools, camps and other youth organizations. The majority of Kango drivers use their own vehicles, but a select number use Chrysler hybrid minivans, courtesy of a partnership with the vehicle manufacturer.
As Kango grows its school transportation business, “we don’t see ourselves as replacing the yellow school bus,” Schaer said, “but as a complementary service.”
For example, Kango can help districts meet “sub-optimal routes,” where it doesn’t necessarily make sense to operate a 38-child school bus.
Kango currently operates in San Francisco and neighborhoods in Los Angeles. The plan is to expand to the rest of the state and then outside of California, Schaer said.
A growing number of startups now occupy the kids’ ride-sharing space.
The largest, Zum, launched in 2015 and serves Arizona, California, Florida, Illinois and Texas. Like Kango, Zum originally targeted parents making individual bookings for their children, but now focuses almost entirely on school transportation.
Like its competitors, Kango has a rigorous screening and in-person interview process for all drivers and child-care providers. The process includes multiple background checks, DMV record checks, employer reference checks, vehicle inspections, fingerprinting and TrustLine caregiver certification.
Kango is the only ride-share service insured to drive children of all ages and offers on-demand, same-day rides with no cut-off time for booking, the company claims.
Asked about a common criticism leveled against ride sharing – that it puts more cars on the road and siphons bus ridership – Schaer said, “what we see is we are replacing parents’ vehicles at the schools.” What is more, Kango vans have a higher likelihood of picking up multiple kids at school, she said, rather than parents who tend to pick up their kids individually.
Kango started out as peer-to-peer carpool platform, and the app still hosts carpool groups, where parents can post notes requesting shared rides with other families.
The latest funding round brings the total amount of money Kango has raised to $5.6 million.