In a significant development, Metropolis, an AI-powered parking platform, is acquiring Oosto, a computer vision company formerly known as AnyVision, for $125 million, according to a reliable source. This deal marks a significant exit for Oosto, which had raised $380 million from investors over the years, but struggled to overcome controversy and valuation issues.

The acquisition, reported by Israeli press outlets, including Globes, comes after Oosto put itself up for sale last week. Notably, Metropolis and Oosto had already been working together prior to the deal, and a large part of the transaction involves shares. While both companies have declined to comment, the sale is expected to be completed soon.

Oosto's tumultuous history dates back to its days as AnyVision, a computer vision startup that built technology used in controversial surveillance applications. The company faced intense scrutiny over its involvement with organizations quietly using its technology, as well as its role in enabling the Israeli government to spy on Palestinians. The negative publicity led to Microsoft withdrawing its strategic investment, although other investors, including SoftBank and Eldridge, continued to back the company.

In 2021, AnyVision rebranded as Oosto, pitching itself as an ethical AI company, and raised a substantial $235 million in funding. However, the company continued to struggle, with reports of layoffs and a failed research partnership with Carnegie Mellon University. Today, Oosto's annual revenues are reportedly below $10 million.

The acquisition raises questions about the timing of Oosto's struggles. In recent years, the geopolitical landscape has shifted, and AI has become more mainstream. New companies like Anduril and Helsing have emerged, pushing the boundaries of AI development in military, defense, and "resilience" technology. It's possible that Oosto's controversial past would have been viewed differently in today's context.

The deal also highlights the challenges faced by AI startups, many of which are funded on high hopes but struggle to generate significant revenues or profits. The rise and fall of Oosto serve as a cautionary tale for newer AI companies.

Metropolis, on the other hand, has focused on building AI-based systems for parking, automatically tracking cars and charging accordingly. In 2023, the company raised $1.7 billion in financing and other investment, largely used to acquire another parking technology specialist, SP Plus. The acquisition of Oosto could potentially expand Metropolis' business into mobility and other applications.

Avihai Michaeli, an investment banking advisor based in Tel Aviv, believes the acquisition makes sense from a technical perspective. "Both Metropolis and Oosto are key players in the AI-driven computer vision and security solutions space, with applications that enhance urban management, public safety, and automation," he said. Michaeli also noted that the current war in Israel has created challenges for some Israeli companies looking to raise money or conduct business, which may have played a role in the deal.

The acquisition of Oosto by Metropolis marks a significant development in the AI industry, highlighting the challenges faced by startups and the importance of strategic partnerships. As the deal unfolds, it will be interesting to see how Metropolis leverages Oosto's technology to expand its business and create safer, smarter, and more efficient environments through AI and data analytics.