Kids can't take Uber and Lyft rides alone. A startup thinks it found the perfect solution - and has backing from the US' largest school bus company

Kango

With Kango, parents can arrange rides for their kids with trained caregivers, and monitor rides the entire way.

• Uber and Lyft don't allow unaccompanied minors under 18 years old, though the stipulation isn't stopping some.
• To fill the gap, startups like Kango offer scheduled rides with trained caregivers in what they call "childcare as a service."
• The startup's backed by one of the world's largest school bus operators, founder Sara Schaer said in an interview with Business Insider.
• Kango is live in California and Arizona, with plans to expand to other metro areas in the future.
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When Uber and Lyft's Silicon Valley executives and investors needed to shuttle their children to and from school, soccer practice, or any other activity, they couldn't turn to their own services.

Minors under 18 years old are expressly prohibited from taking rides on the two dominant ride-hailing platforms without a guardian. And even though many parents and drivers haven't seemed to mind that finely printed rule, filling that gap for rule-following (or safety conscious) parents is proving big business for a slew of startups.

Kango, one of the first to the space, was born out of the same necessity.

"I was working for a previous startup, and I'd become a parent along the way with two small kids," Sara Schaer, founder and chief executive of Kango, told Business Insider in an interview.

"My husband worked over an hour away and had to commute every day, so I was literally struggling with how to line up reliable and safe what is essentially childcare on wheels."

And in 2014, Kango was born.

The company declined to share revenue or ridership figures, but Schaer noted that "our priority has been on figuring out the economics first" and then worrying about growth. Most recently, it expanded the "child care and rides as a service model" to Phoenix, Arizona, as its first market outside of California.

Such success so far has been thanks in part to help from National Express, the $3 billion transportation company operating school buses, coaches, and trains in North America and Europe.

"They literally transport a million and a half kids per day just in the US," Schaer said of the company's leading Kango's $3.6 million Series A round in 2019. Other backers include early Uber investor Structure Capital "whose kids rides with Kango," she added.

But of course, transporting kids comes with its own set of challenges. Insurance has been a tricky subject even for the two "traditional" ride-hailing companies - without kids. Insurance, alongside payments, remain the top two expenses for both Uber and Lyft. In the third quarter, Lyft took an $87 million hit thanks in part to changes in its insurance providers.

"Even as a young startup, it's important to note that in the rides- and transportation-for-kids space, you have to do things correctly from the start - and that's certainly the case with insurance," Schaer said. "You just simply won't get insurance coverage if you're not doing things safely, if you're not reporting regularly all the data, which is quite extensive."

"That's not easy to come by," she added.

It's not easy, but there are competitors. In Arizona, where Kango has most recently expanded, it competes with HopSkipDrive - also backed by a school bus company - which operates in five other states, and Zum, backed by BMW's venture arm and Volvo.

Unlike Uber and Lyft, a "vast majority" of Kango's rides are scheduled in advance, Schaer said, and customers can arrange entire months of rides in advance. And as you might expect, back-to-school rushes in the fall and winter tend to be the busiest times, with some summer downtime (except for summer camp, of course).

"The thing about childcare is that parents and kids alike really benefit from consistency, both from the standpoint of school and camps and activities, and needing to verify identities," Schaer said.

Parents can designate a preferred driver or group of drivers and only request rides from those people. Drivers also must have prior childcare experience to work for the app.

"All of this together is the crux of the difference," Schaer said. "We not only strive and pride ourselves on, like anyone's parents wold, to provide not only a physically safe but an emotionally safe experience."

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