Transportation is the overlooked glue of our daily lives. Through it, we can make our IRL obligations happen, understand the priorities, shortcomings and pulse of a city, interact with strangers and even get a glimpse into civilization. Passengers all around the world take an impressive 300 billion trips on public transport each year, with cumulative fares of about US$720b. Yet rarely do we contemplate the mechanics that underpin this important part of our daily existence. That is until we notice things beginning to fray around the edges.
In Australia, Victoria’s recent upheaval of the Myki system has been widely criticised amid questions over the ability of vendors to deliver as promised, as well as value for money against a $1.7 billion price tag. Not to mention the hallmark feature of the upgrade for consumers being the introduction of tap-n-go payments using standard credit cards or digital wallets - a feature that London commuters were first introduced to in 2013; and to Sydney in 2017.
Amongst this backdrop emerges tikpay - a modern ticketing and payment solution that empowers travellers to pay for and use transport however, whenever, and wherever they choose - all whilst reducing ticketing costs for operators by 40% or more.
Tikpay’s offering gives flexibility to consumers; allowing them to pay using their method of choice, across a variety of pricing models including fixed, prepaid, or distance based pricing. Likewise, operators are able to easily introduce bespoke products (like concessions) and scale them across a wide range of transport modes including buses, rail, micromobility and more.
AfterWork Ventures are proud to be co-leading tikpay’s pre-seed round alongside Black Nova Ventures, with participation from Investible, Func Ventures, Metagrove Ventures and strategic angels.
What we loved about the idea
An incontrovertible ‘why us’?
Tikpay is the continuation of a career-long project from founder Michael Walters to modernise ticketing and payments for consumers and operators alike, in cities all around the world. Michael is an archetypal subject matter expert, with a resume spanning payments consulting, investment, founding and operating multiple businesses, and more recently policy as a board member of the Financial Market Infrastructure Committee of Bank Negara Malaysia - the central bank of Malaysia. In fact, this is Michael’s second time around the block in building innovative backend ticketing and payments systems, having founded UK based Littlepay in 2017. In tikpay, we saw a chance for Michael continue doing his life’s work, in the company of other impressive experts.
Joining Michael in tikpay’s leadership team is CPO Belinda Ralston and CTO Simon O’Connor; who have previously worked together at enterprise SaaS businesses Papercut Software and HROnboard. The teams’ extensive experience, alongside their tenacious commitment to improve the transport payment experience and reimagine mobility, was impossible to ignore.
A system that works better for everyone
Jim Barksdale famously stated that “there’s only two ways to make money in business: one is to bundle; the other is unbundle”. Public transit has traditionally been dominated by large, legacy, vertically integrated players offering services right from building physical gates at stations through to backend software. Such a steady state is anathema to the modern startup psychology where “doubling down on what you do best” is the surefire way to extract maximum output through limited resources.
This legacy approach has failed consumers and the transit authorities that service them. For example, basic functionality such as open loop payments (tap-n-go using your regular debit card or digital wallet) are only just creeping towards reality in major Australian cities such as Melbourne, with its Myki system. Though the plans are in place, implementation is still a while off.
Tikpay represents a modern approach, in which vertical integration is disrupted by leaner, best-in-breed solutions for each step in the value chain. Not only does this ensure consumers are able to access the highest quality service, it also reduces underlying costs for operators by up to 40%.
A window into the future of transport
Notwithstanding the ‘here-and-now’ case for tikpay, mobility futurists continue to tout a utopian vision for a MaaS (mobility as a service); where individual modes of transport become secondary to the overall consumer outcome of getting from A-to-B. In this reality, your daily commute is considered one ‘product’ from home to the office rather than three separate transactions of a bus ride, plus a train, plus a trip on a Lime bike.
Interoperability is the real unsolved problem here - especially where distinct private operators will continue to play an important role in the transport system. Fortunately, we are seeing some advances, most notably around route planning. If you use Google Maps you’ll be very familiar with it comfortably modelling multi-modal trips using Uber, e-scooters, public transport, and more. However, tikpay provides an important piece of infrastructure in taking interoperability to its logical extreme of a single product view. This would allow consumers to pay for a single ticket that can be redeemed across multiple operators, whilst ensuring revenue is apportioned correctly.
The challenges we saw
Entering government sales cycle hell
At first glance, public transit sits squarely in the purview of government transit authorities and sets tikpay up to be staring down the barrel of protracted, multi-year, idiosyncratic government sales processes. Whilst this is undeniably an important part of the transit industry, tikpay’s modular solution makes them an attractive offering for small and medium sized private operators, here in Australia and internationally. This bottom-up approach provides a credible pathway for both revenue traction and technology validation to complement the top-down ‘hunting elephants’ approach with major transit networks.
Playing in a world where “moving fast and breaking things” won’t cut it
Transport is critical infrastructure in most cities around the world. Earning the right to play means proving reliability and mitigating risk for operators. Speed of delivery aside, this also has implications on capital requirements for the business and the investments required for both implementation and customer support. Again, tikpay must navigate a pathway to prove their world-first, superior offerings at a sustainable, albeit meaningful, scale before recycling both capital and goodwill into future growth inflection points for the business.
How we built conviction
It’s rare to meet a team able to synthesise such deeply earned sector expertise into a clear product vision. Michael, Belinda, Simon and the team have a unique insight into the paradigm shift underway in the transit industry and understand that the combination of rising consumer demands as well as ever increasing costs (both financial and in missed opportunities) make now the perfect time to bring tikpay into the world. We’re very ready to imagine moving about with less friction and less frustration.
