# Leap Transit (2013 – 2015)

- URL: https://girisimcikafasi.com/en/startup-graveyard/leap-transit/
- Sector: Mobility and transport
- Country: United States
- Total funding: $2.5 million
- Cause of closure: Regulation and legal issues

## What did it do?

Leap Transit ran a private luxury bus line in San Francisco between the Marina district and the Financial District during the morning and evening rush hours. Its refurbished buses had leather seats, Wi-Fi, power sockets and snacks, and a one-way ticket cost $6.

## Why did it shut down?

The company ran trial journeys with a single hired bus in May 2013, and on 18 March 2015 launched full service with four buses on a nine-stop route. In May 2015 the California Public Utilities Commission ordered it to stop, saying it was operating without a permit and had not provided proof of compliance on insurance, workers' compensation and driver testing. The removal of wheelchair access equipment from the buses was also criticised as a breach of accessibility rules. Unable to resume service after what was described as a temporary pause, Leap filed for Chapter 7 bankruptcy on 15 July 2015, declaring debts of between $100,000 and $500,000. In October 2015 the remaining buses were put up for auction with bids starting at $5.

## The story

Leap Transit emerged in San Francisco in 2013 under Kyle Kirchhoff. The company aimed to offer a comfortable commute as an alternative to the city's crowded municipal buses. In May 2013 it ran trial journeys with a single hired 36-seat bus. It then raised around $2.5 million from investors including Andreessen Horowitz, Index Ventures, Slow Ventures and Salesforce CEO Marc Benioff.

On 18 March 2015 Leap launched full service. Its four large buses, running on compressed natural gas, had been completely refitted with leather seats, Wi-Fi, power sockets, coffee and snacks. On the nine-stop route between the Marina and the Financial District, a one-way ticket cost $6, and the buses ran during the morning and evening rush hours.

But the company had not obtained a state permit for the service. Leap believed it was legal because it operated only within city limits; the California Public Utilities Commission thought otherwise. The cease-and-desist order that came in May 2015 stated that the company was operating without a permit and had not provided documentation on insurance, workers' compensation and driver testing. The removal of wheelchair access equipment from the buses was also criticised. The company said services had been temporarily suspended, but its buses never took to the road again.

On 15 July 2015 Leap filed for bankruptcy under Chapter 7. The filing listed both debts and assets at between $100,000 and $500,000, and gross revenue for 2015 was just $20,748. In October 2015 the buses were put up for auction with bids starting at $5. Leap's story is a reminder that moving fast in a regulated industry does not mean ignoring the rules.

## Lessons

- In tightly regulated fields such as public transport, scaling without the required permits can halt the entire business at the first inspection; treat the licence as part of the product.
- Skipping legal obligations such as accessibility for the sake of a design choice creates both legal and reputational risk.
- Before taking on high fixed costs for a luxury experience, use a small, cheap pilot to measure whether the route actually runs full.

## Sources

- [Leap Transit](https://en.wikipedia.org/wiki/Leap_Transit)
- [Luxury Bus Company Leap Declares Bankruptcy, Auctions Buses for $5](https://www.entrepreneur.com/business-news/luxury-bus-company-leap-declares-bankruptcy-auctions-buses/250711)