Metropolis Acquires Oosto: AI Vision Startup Deal

AI Startup Acquisitions Reflect Market Realities

Despite the widespread enthusiasm surrounding artificial intelligence, not all AI-focused startups are thriving, with some actively seeking acquisition opportunities.

Metropolis Acquires Oosto in All-Stock Deal

Recent reports confirm that Metropolis, an AI-driven parking platform, has acquired Oosto, a computer vision company formerly known as AnyVision. The transaction, structured as an all-stock deal, is valued at $125 million.

This figure represents just one-third of the $380 million in funding Oosto previously secured from investors, a number disputed by some sources.

Financial Details and Valuation

Metropolis currently operates in 4,000 locations and processes approximately $5 billion in payments annually. Notably, the company is currently seeking funding at a valuation nearing $5 billion.

Oosto’s investors, including SoftBank, FifthWall, Lightspeed, and others, will receive Series D preferred stock as part of the acquisition.

Leadership Transition

The acquisition encompasses Oosto’s intellectual property and its team. Avi Golan, the current CEO, and Dieter Joecker, the CTO, will assume senior positions within Metropolis.

A company spokesperson verified these details, stating that Metropolis, an AI company specializing in checkout-free payment experiences, is acquiring Oosto, a leader in AI safety and security.

Oosto's Tumultuous Recent History

News of Oosto’s potential sale initially surfaced last week, as reported by Globes.

The sale concludes a challenging period for Oosto, marked by controversy and restructuring.

Past Controversies as AnyVision

Previously operating as AnyVision, the company faced scrutiny for its involvement in controversial surveillance technologies. Reports detailed the use of its technology by various organizations, including alleged Israeli government surveillance of Palestinians.

Concerns were raised regarding the extent of data collection practices employed by the company.

Investor Shifts and Rebranding

The negative publicity led to the loss of Microsoft as a strategic investor, although other investors remained supportive. In 2020, Avi Golan was appointed CEO.

In 2021, rebranded as Oosto and positioning itself as an ethical AI provider, the company secured $235 million in funding led by SoftBank and Eldridge.

Challenges and Revenue

Despite the significant funding, Oosto encountered further difficulties, including layoffs and the termination of a research partnership with Carnegie Mellon.

Sources indicate that Oosto generated approximately $20 million in annual revenue and was actively securing new contracts prior to the acquisition.

Geopolitical Context and Market Trends

Some observers suggest that the timing of Oosto’s challenges may be linked to broader geopolitical shifts and the increasing mainstream acceptance of AI in defense and security applications.

The Oosto case serves as a cautionary tale for newer AI companies relying on substantial funding without commensurate revenue or profitability.

Metropolis's Strategic Focus

Metropolis concentrates on developing AI-based systems for parking management, automatically tracking vehicle entry and exit, and facilitating payment. In 2023, the company raised $1.7 billion in financing, largely to acquire SP Plus, a parking technology specialist, for $1.5 billion.

The integration of Oosto’s technology will primarily enhance Metropolis’s computer vision capabilities within parking environments, with potential expansion into related areas like drive-through services.

Industry Expert Commentary

Avihai Michaeli, an investment banking advisor, emphasized the strategic alignment of the acquisition. He noted that both Metropolis and Oosto are key players in AI-driven computer vision and security, contributing to safer and more efficient environments.

Michaeli also pointed to the challenging fundraising environment for Israeli companies due to the ongoing conflict.

Funding Discrepancies

Update: A source familiar with Oosto’s finances claims the company raised approximately $160 million in total. While a $235 million investment from SoftBank was announced in 2021, only $60 million was initially disbursed.

Subsequent tranches were not delivered as SoftBank’s Vision Fund scaled back its investments and Oosto underwent restructuring. Public records continue to indicate funding between $350 million and $380 million.