While Silicon Valley talks up its own brand, Europe has several characteristics that do a better job of forcing companies to hone their products, platforms, and business models. By facing the tough crucible of the demanding European travel market, entrepreneurs must build companies that can be scaled up globally with speed.
Unlike gatherings in Davos and elsewhere where panelists often lay into Europe’s perceived lack of entrepreneurial culture, panelists today in London at the inaugural Skift Forum Europe found that Europe is an ideal place to build the travel company of tomorrow.
Seton-Rogers explains that there are a few reasons why. There is so much demand — seven out of 10 of the most visited destinations are European cities. On top of that, when you look at the cultural and national complexity of Europe, due to its geographic compression, such as the need for translation into multiple languages, entrepreneurs are forced to solve problems in the design of their businesses that will give them competitive advantages when it comes time to scale up globally.
As an example, Seton-Rodgers points to Blablacar, the carpooling startup founded in Paris. “Blablacar couldn’t have been invested in in the US and couldn’t have taken off there. The complexity in Europe’s travel options for inter-city travel, and the sheer variety of transportation in Europe, made it perfect as a launching pad.” He says the well-funded company now has competitive advantages as it enters new markets in Asia and Latin America because it has already thought through the hard problems.
Other examples show that Europe is a great place to found a travel startup, despite not having the hype of Silicon Valey. During an onstage panel talk with Skift founder and CEO Rafat Ali, Seton-Rogers pointed to his firm’s successful exit last year for Onefinestay, the upscale vacation home booking platform (in a sale to AccorHotels). PROFounders Capital itself has partners who have seen successful exits for European-based travel companies such as Booking.com and LastMinute.com.
In 2015, venture capital firm KKR snapped up Trainline, then Britain’s largest digital rail-booking operator for UK train trips, right as it was planning to float on the London Stock Exchange. KRR then helped fund Trainline’s acquisition of its cross-channel rival Capitaine Train (Captain Train), a Parisian marketplace for inter-city European rail tickets.
Both companies have led in market share for the digitization of rail ticket buying. Trainline today says it processes more than $2.5 billion a year in tickets.
Trainline is now expanding to Eastern Europe and Asian markets. Gilmartin agrees that the stringent demands of developing a booking business in Europe’s complex market serve it well as it enters foreign markets.
Seton-Rodgers pointed to examples of companies that take advantage of Europe’s complexity to create efficient and elegant solutions to consumer problems: Distribusion, tackling inter-city coach bus distribution; GoEuro, focusing on multi-modal travel; and Trainline, focusing on making train and coach travel painless and digitized. He also called out two of his portfolio companies, Festicket (which is a booking platform for outdoor concerts and other events) and GetYourGuide (the tours and activities platform).
GetYourGuide‘s co-founder and COO Tao Tao tells the Skift Forum Europe audience that one deficit in Europe is in venture capital. “Building a consumer marketplace is expensive,” he says. “We have had to raise $95 million.”
But when GetYourGuide needed capital, it had to look beyond Europe. For later-stage rounds, it had to solicit funds from investors on the East Coast of the U.S.
So when it comes to financing, Europe does need to catch up to Silicon Valley in that California region’s willingness to risk venture capital at scale, not just angel funding at early stages, the experts say.