The AI Hype: A Double-Edged Sword for Startups
While artificial intelligence continues to be a buzzword, not every startup is riding the wave to success. The recent acquisition of Oosto by Metropolis sheds light on the ongoing challenges some AI companies face. Metropolis, known for its AI-powered parking solutions, has acquired Oosto—a computer vision company with a controversial past. The all-stock deal is valued at $125 million, a stark contrast to the $380 million Oosto had raised from investors.
Understanding the Acquisition
Metropolis is no small player in the AI space. Operating in 4,000 locations and processing a significant $5 billion in payments annually, it is now leveraging this acquisition to bolster its valuation, reportedly nearing $5 billion. Investors of Oosto, including big names like SoftBank and Lightspeed, have received Series D preferred stock as part of the deal. This acquisition includes not only Oosto’s intellectual property but also its team, with key figures like CEO Avi Golan and CTO Dieter Joecker joining Metropolis.
“Metropolis, an artificial intelligence company whose computer vision platform enables checkout-free payment experiences for the real world, has agreed to acquire Oosto, the leading AI safety and security company.”
– Official Statement
A Glimpse into Oosto’s Past
This transaction marks a turbulent end for Oosto, formerly known as AnyVision. The company was under scrutiny due to its involvement in surveillance technologies. Reports surfaced about its technology being used by the Israeli government for monitoring Palestinians, leading to Microsoft withdrawing as an investor. Despite these challenges, investors like SoftBank continued their support, hoping for a turnaround.
Looking Towards the Future
In 2020, under new leadership with Avi Golan as CEO, AnyVision rebranded to Oosto and attempted to pivot towards enterprise applications. However, financial struggles persisted, with layoffs and severed partnerships marking its journey. Sources suggest that Oosto’s annual revenue was around $20 million—far below expectations.
The Metropolis Strategy
Metropolis aims to integrate Oosto’s computer vision technology into its parking solutions rather than diversifying into other sectors. Having recently raised $1.7 billion in financing—most of which was allocated towards acquiring SP Plus—Metropolis appears focused on refining its core offering. This move could potentially pave the way for incorporating similar technologies in environments such as drive-throughs.
“Tech-wise this acquisition makes perfect sense,” says Avihai Michaeli, an investment banking advisor based in Tel Aviv. “Both Metropolis and Oosto are key players in AI-driven computer vision and security solutions space.”
– Avihai Michaeli
The Broader Implications
Oosto’s story serves as a cautionary tale for new AI startups entering the market with high ambitions but limited revenue streams. The acquisition also highlights challenges faced by Israeli companies amidst geopolitical tensions that could affect their business operations and fundraising efforts.
