The travel sector has been clobbered as people around the world have largely stayed home for the last year.
But even during the depths of the pandemic, some travel startups have been successful in attracting fresh funding from investors.
Many of those investors are optimistic that demand for travel will come roaring back, and relatively soon.
“While the pandemic has clearly had a significant impact on the industry, we feel very confident that people’s desire to travel will continue to persist and companies will thrive on delivering exceptional experiences,” BoxGroup partner Nimi Katragadda said. BoxGroup is an investor in short-term rental startup Kasa Living.
That optimism varied, though, depending on the segment of travel — many seem to believe that while pent-up demand will bring leisure travel back to pre-pandemic levels, a year of remote work may have fundamentally changed the market for business travel.
With the help of data from Pitchbook, we profiled the travel and hospitality startups that have raised large amounts of venture capital since March 2020 and asked key investors for their thoughts on these companies’ business opportunities.
The startups that have raised money over the last year range from vacation rental management businesses to companies plotting the future of corporate travel and supersonic flight:
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Corporate travel startup TripActions announced it had raised a $155 million Series E in January.
The round of funding came after the company, which manages corporate travel for companies like Lyft, Pinterest, and Zoom, laid off 296 employees at the end of March. Just before the pandemic hit, on February 26, the company disclosed it had taken on $500 million in debt as it launched a new product, called TripActions Liquid, that offers customers a way to finance their business trips.
TripActions has since doubled down on its expense management offerings while corporate travel demand has remained low.
Investors who participated in the startup’s Series E said the company’s decisions during the pandemic positioned it well for a post-Covid future.
“Buying a new travel solution during shelter-in-place where no one can go anywhere is lower on the list of things a CFO worries about,” Elad Gil, who co-led the Series E with Andreessen Horowitz and Addition, told Insider. “Despite this TripActions grew significantly in 2020.”
Arif Janmohamed of Lightspeed Venture Partners, which has invested in TripActions since its seed round, said the company checks the boxes of having a strong team and product working in a large market.
“They moved into the enterprise segment with their features and their full product line and were able to continue to aggressively gain market share” even over the last year of the pandemic, he said.
TripActions has raised about $1.27 billion in total, and its latest financing valued it at $5 billion.
Sonder raised a $170 million Series E in June, bringing its valuation to $1.3 billion.
Sonder manages short-term rental spaces, most of which come equipped with kitchens and private laundry.
It laid off or furloughed about 400 employees — a third of its staff — last March, as global travel ground to a halt due to the pandemic.
But founder and CEO Francis Davidson told Insider in July that the company views “the next 12 to 18 months as a really great time to grow.” He said that the pandemic bringing travel to a halt has led to opportunity for Sonder; for example, as some landlords looked to offload short-term rentals from their portfolios, Sonder was able to sign deals it may not have otherwise been able to.
Sonder’s Series E was led by Fidelity Investments, WestCap, and Inovia Capital. It has raised more than $548 million in total, according to Pitchbook.
“Our Series E would not have been possible without the strong relationships we’ve forged with property owners, who have partnered with us to adjust lease terms,” the company said in a press release. “This, along with some extraordinary, and at times painful, cost-cutting measures, have allowed us to maintain a strong cash position, crucial to the long-term success of the business.”
Vacation-rental management company Vacasa announced a $108 million Series D in June.
Vacasa has about 25,000 vacation rentals on its platform. It provides homeowners with tech support like dynamic pricing and marketing as well as premium cleaning and maintenance services.
On March 11, it announced it would acquire TurnKey Vacation Rentals, adding more than 6,000 rentals to its portfolio.
Vacasa reportedly laid off an unspecified employees, reduced hours, and cut executive pay in March 2020, in response to the pandemic.
But its focus on vacation rentals in destinations within driving distance from urban centers may have given it a slight edge, as this type of travel has been popular amid the pandemic.
“We believe in the team, the business model and the customers and communities Vacasa serves, and that this investment enables the company to continue to innovate and to maintain its strong growth trajectory,” Joerg Adams, managing director at Silver Lake, which led the Series D, said in a press release about the funding.
Vacasa has raised a total of $634.5 million in venture capital since its founding in 2009. It has been rumored to be pursuing an IPO and recently appointed Jamie Cohen, who has prior IPO experience, as its CFO.
Hipcamp, which has been called the “Airbnb of camping,” raised a $57 million Series C in January.
Like Airbnb, Hipcamp allows travelers to book stays at private properties, with a focus on both homes in outdoorsy locations and privately held land, like on ranches and farms, for camping. Hipcamp also lists public sites where travelers can camp.
The startup likely benefited from the unique travel environment created by the pandemic in 2020. Though it was hurt by early limitations on travel, after some restrictions were lifted last spring and summer, many ventured to destinations they could drive to and where they could spend time largely outside.
Founder and CEO Alyssa Ravasio told Insider in December that the platform had seen its web traffic double in 2020 over the prior year, driven by strong performance in the summer. At the same time, the distance that travelers were going to get to their destinations shrank by 40%.
New investors in Hipcamp’s January Series C included Bond Capital, Index Ventures, and Narrative Fund.
Hipcamp was valued at $127 million at the time of its Series B, which was completed in 2019. The Information reported that the startup’s Series C valuation is unknown but could be more than $300 million.
Boom Supersonic raised a $50 million Series C in December.
Boom Supersonic is developing high-speed aircraft with the goal of making global travel more accessible.
The company’s supersonic commercial jet, called the Overture, is still in the prototype phase, with test flights planned for this year. The planes are expected to cost $200 million each and would be able to cut flight times in half if successful. The company says it currently has $6 billion in preorders for the planes.
The company is targeting 2025 to roll out its planes and 2029 to begin commercial flights.
Its Series C was led by WRVI Capital, with contributions from IOVC and Prime Movers Lab. It valued the company at more than $1 billion. Boom has raised about $210 million in total.
Boom additionally announced it had secured a strategic investment from American Express Ventures on March 4, though the amount raised was not disclosed.
“Boom is building a supersonic passenger aircraft that will make travel faster and more sustainable,” Harshul Sanghi, global head of Amex Ventures, said in a press release. “Travel has been a key part of American Express’ heritage and it remains an integral part of our Card Members’ lifestyles. We are excited to support Boom’s development and invest in the future of travel.”
Short-term rental startup Kasa Living announced a $30 million Series B in October.
CEO and founder Roman Pedan told Insider’s Alex Nicoll that he considers Kasa Living the “Southwest Airlines of the sector,” given its focus on low prices and destinations outside of coastal hubs.
In the 26-page pitch deck it used to raise its Series B, shared with Nicoll, the startup describes itself as combining elements of hotels and Airbnb: it lists apartments as discrete units that can be booked, like hotel rooms, but that are furnished and professionally managed by Kasa.
The company makes money by entering into revenue sharing agreements with landlords. Nimi Katragadda, a partner at BoxGroup, which has invested in Kasa since 2019, said this focus has made it an attractive investment. She said its business has remained strong while competitors have floundered during the pandemic.
“They’ve maintained occupancies at similar levels to pre-COVID, outperforming a typical hotel room on revenue per room by over 2x and outperforming on profit per room by over 10x,” she said to Insider. “This market environment also accelerated the shift towards managed contracts, which was already underway but continues to be a strong focus area and is an attractive business model.”
Short-term rental startup Mint House has raised two rounds of venture capital during the pandemic.
It raised a $29.8 million Series A at the beginning of March 2020, just as the pandemic was getting into swing in the US. It raised another $18.3 million this February.
Similar to Kasa Living, Mint House operates short-term rentals that cater to business travelers and are meant to be a sort of crossover between a hotel and an Airbnb. Founder and CEO Will Lucas told Insider that as of November, it had signed 10 partnerships with Fortune 200 companies.
Investor Tom Mangas of Centerfire Capital — also the former CEO of Starwood Hotels — said Mint House has a “much stronger hand to play post-pandemic” because it did not run into the liquidity issues that many of its competitors faced during the pandemic.
“It forced a rethink of how to attract guests,” Mangas said. “Traditional corporate travel totally dried up. Health care workers, first responders, and others looking to quarantine found Mint House perfectly met their needs, and as a result, they had very strong [revenue per available room] through the pandemic.”