The CityMapper Business Model – How Does CityMapper Make Money?

Executive Summary:

CityMapper is a transportation app that allows users to compare travel options in real-time across a variety of transport modes.

CityMapper makes money via subscriptions, referral fees, as well as licensing fees from its enterprise product.

Founded in 2011, CityMapper has become one of the world’s most popular navigation apps. Its founder has raised close to $60 million in funding.

What Is CityMapper?

CityMapper is a transportation app that allows users to compare travel options in real-time across a variety of transport modes.

Those options include trains, buses, metros, taxis, and other ride-hailing options such as Uber, bikes, e-scooters, or even walking.

CityMapper currently covers all major cities across Europe as well as North America. It has also begun expanding into Asia.

The app’s users are the ones that can vote on what city is going to be covered by the app next. Substantially more options are available via the app’s Enterprise product, which allows other businesses to add navigation to their products (via an SDK).

Users can, furthermore, book those train rides or scooters right within the app. However, there are two caveats.

First, they need to be signed up for CityMapper Pass, which is a monthly premium subscription that can be canceled at any time. The pass also comes with a physical debit card powered by Mastercard.

CityMapper offers two other subscriptions, namely SUPER Pass and SUPER DUPER Pass, which give customers unlimited access to public transport (SUPER) as well as scooters and cabs (SUPER DUPER).

Unfortunately, as of right now, the second caveat is that CityMapper’s subscription is only available to London residents.

CityMapper, apart from its various navigation features, also provides users with the number of calories they burned and other interesting stats for every trip they took.

One can also personalize a location, for example by adding their favorite restaurants, work location, and much more. Users can even share their feeds on various social media channels.

The maps that CityMapper displays can either be accessed online or downloaded for offline consumption.

Detailing CityMapper’s Tumultuous History

CityMapper, headquartered in London, United Kingdom, was founded in 2011 by former Google employee Azmat Yusuf.

Yusuf, after wrapping up his finance studies at Wharton in 2002, went on to work in venture capital and private equity.

In 2009, just as he finished his MBA at INSEAD, Yusuf joined Google’s advertising arm where he worked on the monetization of YouTube as well as display ads.

But after close to ten years on the sidelines, Yusuf figured that it was finally time to branch out on his own.

At the time, investors and the general public were slowly starting to realize what disruptive potential smartphones were offering. Startups like Uber would go on to revolutionize entire industries.

The mapping industry was certainly ripe for some new entrants as well. It essentially became Google’s world after early pioneers like MapQuest failed to innovate and keep up with Google Maps, which itself launched in 2004.

However, the unveiling of the iPhone in 2007 would usher in a new era of innovation and entrepreneurship.

What made it even more lucrative was the fact that it took Google until December 2012 to finally unveil a fully functional Maps app on iOS (the Android app was already launched back in 2008).

As a result, many other startups emerged to fill this void. One of the most notable examples was Waze, which launched in early 2009. Ironically, Waze was ultimately scooped up by Google in 2013 for $1.15 billion.

With his extensive background in tech and venture capital, Yusuf was certainly the candidate to disrupt the mapping industry.

And London was certainly the perfect testing ground. The city’s bus system was quite complicated to figure out for outsiders, especially when it came to finding departure spots and determining where to change buses.

Yusuf had a few frustrating experiences himself, particularly during the night when most buses stopped operating.

CityMapper wasn’t the first transportation app he launched, though. Yusuf first unveiled BusMapper, which displayed a city’s bus connections. But he ultimately decided to merge BusMapper with CityMapper, which he launched in 2012.

citymapper launch
Wayback Machine

The app was immediately beloved by both users and Apple alike. CityMapper even earned a place on Apple’s Editor’s Choice while consistently being featured in the App Store.

Yusuf, to further expand the app’s functionality and reach, raised an undisclosed seed round from Connect Ventures and other investors back in September 2012.

This seed funding was enough to finance the company, which had less than a handful of employees, for the next few years.

Fueled by the acquisition of Waze, investors began to bet on a similar exit for CityMapper. Those seed round investors were the same ones that poured $10 million into CityMapper’s Series A round, which was announced in April 2014.

At the time of the funding, CityMapper was active in London, New York, Berlin, and Paris. Expanding the app’s reach would always prove to be a cumbersome undergoing because CityMapper had to tap into a variety of data sources such as bus operator schedules. Furthermore, its engineers would often need to clean up that data to fit the app’s standards.

However, that focus on detail would allow CityMapper to earn repeated shoutouts from Apple. For example, in March 2015, when Apple CEO Tim Cook unveiled the first Apple Watch, CityMapper was one of the apps that were featured in that keynote.

Other times, the team simply took advantage of outside circumstances. When London’s public transit employees went on a strike during the summer 0f 2015, it was CityMapper that came to the rescue by keeping users updated on alternative routes.

It also benefited from the shutdown of competing apps. For example, New York’s transit app HopStop was closed in late 2015, leading many to hop (no pun intended) over to CityMapper.

The app’s continuous growth enabled Yusuf to raise yet another round of funding. In January 2016, renowned investors including Index Ventures and Benchmark Capital backed CityMapper with $40 million in capital. CityMapper was valued at $325 million during that funding round.

CityMapper, at that point, was already present in 29 cities. The team used portions of that funding to refine the product, for instance by adding a feature dubbed SuperRouter, which combined public transport routes with cabs and other alternatives.

By late 2016, during TechCrunch’s Disrupt event in London, Yusuf also began to talk about finally monetizing the app. However, the actual implementation of the firm’s monetization strategy surprised many, to say the least.

In July 2017, CityMapper unveiled its very own bus, which would operate between 9 PM and 5 AM on weekend nights in East London. The team, through the data it collects, determined that this was a particularly underserved route.

The firm labeled this as a ‘smart bus’, which meant that the vehicle incorporated a variety of technological features. For example, it offered onboard tablets that would feature dozens of different apps.

Payments could, furthermore, be made via contactless taps (right from the CityMapper app) or by using Apple Pay and Android Pay.

CityMapper doubled down on its ambition to transport people when it unveiled a separate taxi service in February 2018. Previously, the firm was granted a taxi license to offer taxis in the city of London.

Simultaneously, it also unveiled a van service. People would be transported in an eight-seater Mercedes-Benz Viano, which would drive around town to pick up and drop off customers.

In June, CityMapper secured a partnership with Mobike, which had just been acquired by Meituan-Dianping for $2.7 billion, to incorporate dockless bikes and electric scooters as alternative transportation modes.

The firm took it up a notch when, in February 2019, it introduced the CityMapper Pass premium subscription alongside the branded debit card. As a result, CityMapper would be directly competing with the Oyster card issued by Transport for London (TfL).

Not only that but CityMapper actually adopted it as a loss leader. The card was sold for £31 a week, a discount on the £35.10 that TfL was charging.

CityMapper was also taking shots at the TfL, stating in a blog post that existing “regulation makes it hard to be smart.” Those were a direct result of its struggles to get a TfL license for its bus and van services. The transport agency only granted CityMapper limited access.

Therefore, in June, CityMapper decided to shut down its smart bus and smart ride (8-seater vans) programs. Instead, the firm doubled down on the premium subscription, for example by partnering with ride-hailing firm Kapten, which was added to its unlimited rides tier.

Throughout the year, CityMapper continued to expand the reach of the pass by adding new zones. Meanwhile, indirect competitors such as Uber or Lyft began adding public transport options, thus becoming full-stack transportation platforms themselves.

Unfortunately, the failed initiatives caused CityMapper to lose £20 million in 2019 alone. It also came out that the team tried to raise another funding round in 2018 but investor appetite had ultimately cooled off.

As a result, CityMapper began shopping itself around and even hired U.S. bank Raine to find an acquirer. Things took a turn for the worse when the Covid-19 pandemic forced people across the globe to lock down inside their homes. 90 percent of the firm’s customers canceled their subscriptions.

To make matters worse, long-time president Omid Ashtari, who joined the firm back in 2014, departed from his role after six years. Rumors quickly emerged, stating that Ashtari and Yusuf had a strained relationship for years. They would, for example, allegedly ignore each other during meetings. 

A departing senior executive would, at the very least, allow CityMapper to decrease its cash burn. Additionally, Yusuf managed to raise an undisclosed round of funding to extend the firm’s runway.

In September 2020, CityMapper ultimately replaced Ashtari by hiring Bill Earner, one of the firm’s early investors (Connect Ventures).

The pandemic did provide the team with more time to get creative with monetization. So, in April 2021, CityMapper launched an enterprise product that allows other businesses to get access to its data.

A month later, the firm launched a crowdfunding campaign during which it raised £6.7 million from 9,000 different investors. CityMapper shattered its goal of £1 million within hours of launching the campaign.

At that point, 50 million people in 80 cities across the globe were using the product. However, some investors bemoaned the lack of financial or strategic information that CityMapper provided in its disclosures to the crowd.

CityMapper, as it should, focused on work instead. It launched in a variety of new cities and unveiled features such as voice controls. In May 2022, CityMapper expanded its partnership with micro-mobility company Dott across the European continent.  

How Does CityMapper Make Money?

CityMapper makes money via subscriptions, referral fees, as well as licensing fees from its enterprise product.

Let’s take a closer look at each of the firm’s revenue streams in the section below.

Subscriptions

The bulk of the revenue that CityMapper generates comes from the premium subscriptions that it offers.

CityMapper has various different membership programs that are either limited to a geographic location or available to all users.

The CityMapper Pass as well as the SUPER Pass and SUPER DUPER Pass are only available to the citizen of London.

It continues to act as a loss leader for CityMapper to attract new users to the platform. In comparison, TfL’s Oyster Card costs £4 per week more.

The varying plans determine the level of access a user has to different modes of transportation. For example, the SUPER DUPER Pass grants them benefits such as unlimited Santander Cycles rides, £10 weekly credit on cabs and e-scooters from Lime, Gett, and FREE NOW, on top of the unlimited public transport access.

The second subscription that CityMapper offers is Club, which is accessible to all of its users and not limited to any geographic.

Club, costing £2.99 per month, provides users with multiple perks including voice assistant, more routing options, added destination details, and rain warning.

Going forward, it can be expected that CityMapper will vastly expand the functionality of its Club subscription.

Many freemium products, such as platforms like Strava, monetize premium features as well. The crux is to find a balance, namely to have the free product still be good enough to attract new users.

Those users, over time, become acquainted with said platform. In the case of CityMapper, it may even allow them to save either or both money and time.

By offering access to premium features, those very same users can then enhance their experience to the point that allows them to even save more time and money (and thus see the £2.99 more like an investment).

Referral Fees

CityMapper, as previously stated, allows users to book cabs, e-scooters, or bikes apart from public transportation modes (mainly bus and train).

Those alternative transportation options are consequently operated by private companies, most notably venture-funded tech startups.

CityMapper basically acts as a marketing channel for those services while making it easier for their customers to be able to book rides.

A so-called referral fee is paid whenever a user books a ride through the CityMapper app. The fee is normally in the low single-digit percentage range.

Licensing Fees

The last revenue stream of CityMapper is its enterprise product. The SDK allows other businesses to add navigation to their products.

For example, Snapchat-owned Zenly has partnered with CityMapper to allow its users to meet up with each other by receiving routes and detailed directions right within the Zenly app.

As a result, those users don’t just leave the app and thus stay on the Zenly platform and remain engaged. This, in turn, would allow Zenly to monetize those very same users at more touchpoints.

One of the major benefits of using CityMapper over competing products, such as Google Maps’ API, is its unrivaled access to public and private transport feeds.

CityMapper curates arrival and departure times for hundreds of bus and train operators. Its algorithms are, furthermore, trained on billions of trips, which means the SDK benefits from real-time and multimodal (e.g., bus, train, scooter, etc.) routing.

The enterprise product is then monetized via licensing fees. In all likelihood, CityMapper charges the customer a minuscule fee for every user transaction it supports on their product.

Unfortunately, CityMapper does currently not disclose its pricing structure for the enterprise offering.

Developers can, however, get started for free and test the product out. It will, however, be limited by the number of user interactions it can facilitate.

CityMapper Funding, Revenue & Valuation

CityMapper, according to Crunchbase, has raised a total of $59.5 million across five rounds of equity funding.

Notable investors include Index Ventures, Benchmark Capital, Connect Ventures, Balderton Capital, and many others.

CityMapper is currently valued at £197.7 million (post-money) after its £6.7 million equity crowdfunding raise back in May 2021.

Simultaneously, the app revealed that it had generated around £5 million in revenue during the fiscal year 2020. Numbers for 2021 have not been publicized yet. 

Who Owns CityMapper?

CityMapper does currently not disclose its ownership structure. As a non-public company, it is not obligated to do so.

However, we do have some data points that allow us to derive how the cap table might be potentially set up.

CityMapper raised $40 million during its Series B round where investors valued the firm at $325 million.

Assuming this is the post-money (= adding invested money to the company’s value) valuation, then Yusuf gave up 12.31 percent in equity during that round (= $40 million / $325 million).

CityMapper, during the crowdfunding round, was assigned a pre-money valuation of £191.4 million while it raised £6.7 million.

As a result, investors were able to acquire around 3.50 percent of CityMapper (= £6.7 million / £191.4 million).

In total, Yusuf gave up a minimum of 15.81 percent (12.31 percent + 3.50 percent) in CityMapper equity throughout those two funding rounds.

It can, furthermore, be assumed that investors during the seed and Series A ($10 million) acquired a similar or likely even higher stake than during the Series B ($40 million).

The general rule is that the earlier an investment takes place, the more equity an investor can command. After all, the chance of success is much slimmer the younger a company is.

Hi folks, Viktor checking in! Years of experience in various tech-related roles have led me to start this blog, which I hope provides you with as much enjoyment to read as I have writing the content.