Last weekend’s decision by transportation startup Bridj to fold came after Toyota Motor Co. unexpectedly ended talks to make a big investment in the Boston company, a person with knowledge of the matter said on Monday.
Bridj, which offered rides in sleek, 14-seat shuttles between city neighborhoods, had raised $11 million since its launch in 2014, but struggled with the expense of expanding beyond Boston. The company was counting on funding from Toyota, not only to fuel growth but also to attract other investors.
“Being able to partner with a car company would have really allowed us to be able to put, instead of thousands of vehicles on the road, tens of thousands and hundreds of thousands,” Bridj chief executive Matthew George said in an interview Sunday.
George declined to name the potential investor. In a Sunday blog post disclosing that Bridj was going out of business, he wrote: “Both sides had every expectation that the transaction would close. Despite assurances, and all parties acting in the best of faith, that didn’t happen.”
John Hanson, a spokesman for Toyota, said the company would not confirm or deny that it had held talks with Bridj.
Bridj was seeking to combine the convenience of smartphone transportation apps like Uber with the old-school logistics of running a fleet of $80,000 commuter vans.
Transportation analysts said high costs and a crowded market for public transit alternatives probably sealed Bridj’s fate.
Alongside generally cheaper public transit, it faced competition from ride-hailing startups Uber and Lyft, which have built big businesses fueled by billions of dollars in investor cash. But while Bridj leased vans and put its drivers on the payroll, the ride-hailing companies rely on contractors who typically use their own vehicles. That made Bridj a tougher sell for investors.
“It’s not pixels and bits. It’s a real, live, breathing operation,” George said. “That’s real hard to scale. But we were getting there.”
Susan Bregman, a transportation researcher with Oak Square Resources of Boston, said Bridj’s failure shows that passenger transportation services still need some kind of subsidy beyond rider fares to pay for their operations.
In the case of public transit, that has always been government spending. But for tech startups, cash from private investors fills the same role. Uber has raised more than $8 billion to expand worldwide, giving it a private valuation of more than $60 billion, even as it lost $2.8 billion last year.
Adie Tomer, a fellow at the Brookings Institution Metropolitan Policy Program, said Bridj may have faced increased competition after the ride-hailing companies introduced their UberPool and Lyft Line services, which allow drivers to pick up multiple riders along the same route.
Those services also offer commuters a more costly alternative to public transportation, but with door-to-door service rather than Bridj’s bus routes, which connected central pickup and dropoff spots.
“Bridj attempted to attract choice riders, or those who could choose to take a transportation mode besides public transit,” Tomer said. “If someone was highly price sensitive, they’d turn to the MBTA; if someone had spending flexibility, UberPool and Lyft Line offered more convenient service for only marginally higher prices.”
George, however, said the carpooling services did not significantly affect business, and that Bridj’s “highest rates of growth were postlaunch of UberPool and Lyft Line.” The average Bridj passenger was about 36 years old, with annual income of about $62,000, George said.
Bridj adjusted its routes regularly based on data analysis and consumer demand, and users booked rides through a smartphone app. It also harbored ambitions of extending its transportation network far beyond its commuter bus service.
At one point, George said he planned to eventually use robots to help deliver packages, and Bridj also hoped to capitalize on the gradual introduction of self-driving vehicles on American roads.
But its principal service of offering trips from neighborhood to neighborhood within a city, although updated for the 21st century, didn’t strike some transportation specialists as particularly high tech.
“Bridj was in many ways a very old idea. It goes back to the omnibuses of the 19th century, private shuttles that took you from places like Brookline to downtown Boston,” said Chris Dempsey, director of the nonprofit advocacy group Transportation for Massachusetts. “But I think it was a new idea in that it kind of broke this sort of modern framework that people had been using — either a private car or public transportation.”
Bridj wasn’t alone in trying to spin up a high-tech urban bus fleet. Chariot, acquired last year by Ford Motor Co., was the most successful of several startups tackling a similar idea. Others, such as Leap Transit and after-hours operator Night School, both based in the San Francisco area, were also forced to shut down.
Massachusetts Bay Transportation Authority chief technology officer David Block-Schachter, who formerly worked at Bridj, noted that private buses have long operated on Boston’s roadways, shuttling private company employees rather than the general public.
Still, he said, the public sector has much to learn from Bridj’s run in Boston. The MBTA may want to more regularly evaluate its routing systems, or consider adding smaller buses that run on express routes between residential and commercial districts.
“Surprise, surprise, people like faster service with fewer stops,” Block-Schachter said.Adam Vaccaro can be reached at firstname.lastname@example.org. Follow him on Twitter @adamtvaccaro. Curt Woodward can be reached at email@example.com. Follow him on Twitter @curtwoodward.