Last week we launched the latest report in our Skift Trends Reports service, Venture Investment Trends in Travel 2017.

In our Venture Investment Trends in Travel 2017 report we dive into the world of VC in travel. We contrast this year’s funding against that of previous year’s and identify trends happening in the industry. We identify the areas where funding has been flowing towards, and quantify how much they have received.

Below is an excerpt from our Skift Trends Report. Get the full report here to stay ahead of this trend.

2016 is shaping up as a challenging year for travel startup investment, but there are still plenty of opportunities for those who know where to look. According to venture capital research firm CB Insights, total worldwide travel startup investment through Q3 2016 will reach an estimated $3 billion. While that funding level outpaces the investment levels in travel tech startups seen in the earlier part of the decade, it’s still a significant drop from the record-breaking deal-making seen in 2015. “VC-backed travel tech startups are coming off of a record funding year last year, when deals and dollars peaked at 185 and $4.5B, respectively,” said Marcelo Ballve, research director for CB Insights. “This year, VCs have put approximately $3B into travel tech companies across 138 deals through October 13, 2016.”

A recent chart showcasing CB Insights’ quarterly breakdown of “travel tech” global financing (which includes both the VC-backed companies mentioned above, plus startups financed via other methods including debt and private equity) shows a total of 196 travel technology-related deals in 2016 as of September 21st. This is compared to 212 deals during the same three quarters of 2015. Meanwhile, the dollar value of travel tech funding deals in 2016 has also declined compared to 2015. In 2015 the travel startup sector saw Q2 and Q3 investment of $2.06 billion and $1.62 billion respectively, whereas during Q2 and Q3 of 2016, investment reached just $592 million and $1.01 billion. It’s important to also note that CB Insights’ figures do not include Uber, a company that’s raised significant capital in 2016 and that Skift typically tracks within the travel startup space.

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A chart of quarterly changes in global travel tech financing points to a decline in both funding and deals in 2016.

Still, even if CB’s chart above were to include Uber’s dealmaking, travel funding seems to be down compared to last year. What factors may be contributing to this downward trend? One may be a simple correction from investors looking to moderate the overly-optimistic company valuations of 2015. Another factor may be that there’s simply too many startups competing for investors’ attention at the moment, causing some VCs to adopt a “wait and see” attitude towards new deals. “Many investors are waiting a bit longer to see more traction in companies before they invest,” said Katherine Barr, an investor and founding partner at Wildcat Venture Partners in a July 2016 interview with Skift. “Both to reduce risk and also because they have the luxury of doing so, given the very large number of companies that have received seed funding.”

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This is the latest in a series of twice-monthly reports aimed at analyzing the fault lines of disruption in travel. These reports are intended for the busy travel industry decision maker. Tap into the opinions and insights of our seasoned network of staffers and contributors. Over 100 hours of desk research, data collection, and/or analysis goes into each report.

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