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Lacuna Raises $16M, Aims to Muscle Up City Mobility Programs

As cities look beyond the pandemic, a Silicon Valley startup secures funding as it helps local officials better manage scooters, deliveries and other challenges. Data modeling combined with open source technology is key.

Lacuna CEO Hugh Martin
Lacuna CEO Hugh Martin
Jung Fitzpatrick
The pandemic battered public transit, squeezed ride-sharing operations and, in some cases, clogged roads with e-commerce delivery trucks, lifelines of retail amid a wave of store closures. Now as cities bounce back, a 3-year-old Silicon Valley company called Lacuna Technologies aims to use $16 million worth of fresh capital to help those local governments manage the emerging realities of post-COVID transportation.

Even before the pandemic, major transit changes were taking place at the local level. That includes the rise of Uber and Lyft, the deployment of scooters and other efforts reflecting the intersection of mobile technology, improved data analysis, the so-called sharing economy and the increasing demand for greener modes of movement.

This new funding round, led by Xplorer Capital, will give a boost to the company as it looks to use its open source tech to help cities craft smarter transit policies. Other investors participating in the round included JetBlue Technology Ventures, Lauder Partners, Playground Global and Renewal Funds.

Those policies require better data, said Lacuna CEO Hugh Martin, whose company has raised $33.5 million since its launch in 2018.

“It’s really dependent on understanding what’s happening on the ground,” he said.

That means marrying the data and processes a city already has with software models that Lacuna can build to help map and predict transportation trends.

L.A. AND ITS SCOOTERS


Los Angeles, an early client of Lacuna subsidiary Ellis & Associates, offers an example.

As Martin told it, the software model created by Ellis helped the municipality better grasp the details of its shared scooter program, which is approaching its second year of operation.

For instance, the company found that the city’s poorer neighborhoods accounted for only 1.4 percent of scooter trips, despite the density of those areas, and the need of residents there for relatively cheap and accessible means of transit. The finding, in turn, resulted in work to get more scooters into those areas, an effort that can make it easier for residents to grocery shop and do other daily tasks.

Those insights depend on changes and technological progress already in motion before the pandemic. For instance, the emergence of data standards such as the Mobility Data Specification — designed to get the most from the open source technology used by cities, along with the expanding flow of mobility-related data — is helping to propel these efforts. Lacuna, for its part, helps its clients build digital models, also called digital twins, to anticipate transit needs, traffic and other problems as local mobility patterns change.

“We are doing something very new,” Martin said. “Instead of selling something to cities, we are taking advantage of the open source software they built and are managing, and working with them to implement what they want to do. What we are really getting at is the idea of using these APIs as ways to interact with the technology to provide solutions for government.”

REVENUE AND TAXES


The company makes its money by taking a share of the revenue that cities earn from participants in new programs sparked by the technology.

For instance, a city might want to use Lacuna’s technology to build a program that offers guaranteed reservations to specific curbside areas for trucks making last-mile deliveries — the idea being to not only reduce congestion for citizens, but reduce the time wasted by drivers looking for places to temporarily park. Lacuna would share the registration fees from such a program, Martin said.

“This gives the cities the ability to monetize the public transportation area,” he said.

Indeed, even as cities and municipal agencies look beyond the pandemic, they face the challenge of decreasing gas tax revenue, a major concern when it comes to infrastructure improvement and local mobility programs, as numerous studies have found.

“Because the gas tax is not pegged to inflation, its purchasing power has eroded significantly over the past 28 years, and the tax is now ‘worth’ 45% less than in 1993,” the Peter G. Peterson Foundation, which focuses on U.S. fiscal issues, recently reported. “If the tax had been indexed for inflation each year since 1993, it would be approximately 15 cents higher in 2021.”

MOBILITY OPTIMISM


The need to find other sources of revenue to fund mobility projects is not the only cause for optimism from Martin when it comes to Lacuna’s prospects.

Ride-sharing executives are expecting big growth as the country moves past pandemic restrictions and economic activity increases — predictions suggesting that cities will have to come up with new plans to reduce congestion caused or worsened by those cars, whether on surface streets or in airport parking and holding areas. Lacuna’s technology also can be used to set up ride-sharing congestion reduction plans at airports.

So-called micromobility programs also are set for a post-pandemic renaissance. After what McKinsey called a “banner year” in 2019 for scooters and similarly small means of local transport, COVID-era layoffs and shrinkage in the sector are giving way to expanding programs and use cases, and even longer average distance trips in Detroit and other cities.

However, pandemic habits might keep many residents in their cars for single-occupancy rides, avoiding subways and trains, with resulting traffic impacts, Martin said.

SMARTER CITIES


More generally, Lacuna can be seen as part of the so-called smart city movement. Martin dislikes that term — “it implies that cities aren’t smart already,” he said — but even so, the company’s software, data and modeling efforts fit firmly within the trend.

A Gartner report about post-pandemic smart city scenarios backs up that point.

The research firm found that local government CIOs bent on digital transformation must “expand data-sharing programs, such as open data and data exchanges, to enable ecosystem-driven smart city initiatives by developing a data governance framework.”

The report also touched upon transportation issues for the immediate post-pandemic future — issues that would seem to favor private-sector players such as Lacuna.

“CIOs working on transportation smart city initiatives face new challenges related to rider safety, density of ridership and rider confidence,” the Gartner report stated. “Short-term financial impacts may become long-term issues if the impact of the pandemic persists. The importance of IoT, data and communications projects to ensure rider safety and confidence may supersede previously planned investments.”

Robust funding or not, cities will find it more difficult over time to ignore dealing with new transportation and mobility realities. That holds especially true as more citizens demand a cleaner environment.

“In the longer term, cities have to think how to redesign public space to accommodate the many new mobility paradigms, (such as) converting traditional roads and parking spaces to semi-pedestrianized areas accessible for delivery and people drop-offs,” wrote Dominique Bonte, a vice president and managing director for ABI Research, in an email to Government Technology. “This is very much how new visionary urban design concepts are conceived — moving cars underground and turning cities into pedestrianized areas while still accommodating driverless delivery and micromobility. Main additional drivers underlining these trends are the need for improved air quality, decarbonization, and human-scale urban living.”

In Bonte’s view, Lacuna can help with all that work thanks to several factors.

“Until recently, city governments simply lacked the data and the tools to manage and regulate these new forms of mobility,” Bonte wrote. “This is where Lacuna comes in with a standardized and open framework to collect and share usage data allowing cities to adapt or issue new legislation and/or licensing requirements; companies like Uber have opposed making data from their clients available based on privacy requirements.”

As for Lacuna, that new capital will go toward further development of its technology and expansion efforts. Besides L.A., the company also has worked with Seattle and Miami-Dade County. Martin was not able to detail what cities the company might target next.

“That’s TBD,” he said.

Editor's note: An earlier version of this article misstated the client-vendor relationship between Lacuna and Los Angeles. It has been corrected to clarify that the work referenced was done by a Lacuna subsidiary.
Thad Rueter writes about the business of government technology. He covered local and state governments for newspapers in the Chicago area and Florida, as well as e-commerce, digital payments and related topics for various publications. He lives in New Orleans.
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