Perhaps it’s a coincidence, but every time content becomes king, economies tend to reach a peak in their economic and investment cycles.
So what to make of Culture Trip, an online travel magazine, which said Tuesday it had raised $80 million Series B funding round from investors? The round is one of the biggest-ever financings for a travel media start-up.
Czech private investment fund PPF led the round. PPF is the $40 billion investment arm of PPF Group, a conglomerate with 170,000 workers.
Culture Trip has raised about $102 million to date, it said, after a seed funding of $2 million in 2015 and a Series A round in late-2016 led by PPF.
The goal is to expand the editorial website and mobile app into an online travel agency in summer 2018.
Soon after, it intends to sell tours and activities that are mostly led by its freelancer contributors in a model similar to Airbnb’s Experiences product. This move seems bold, given that Airbnb has not revealed any signs that their new product line is achieving growth rates that parallel the growth rates of its core property rental business worldwide.
The Culture Trip investment comes at a time when talk has begun that bubble in the value of content, with big brands like Amazon, Disney, Netflix, and many telecom companies investing billions in content, primarily video-based. The content is used to justify business models and investment levels that are high relative to historical averages — and possibly a sign of excessive risk-taking.
CEO and co-founder Kris Naudts said his company made much of its revenue from sponsored, or branded, content.
Culture Trip, founded in London in 2011, had revenues of only about $14 million (£10.2 million) in the 12 months ending September 2016 — the last period it was required to disclose revenue according to U.K. law.
One has to imagine a soaring valuation as a multiple on revenue after costs.
The company went from a dozen employees to 200 in the past two years. It now has offices in New York and London and “a research-and-development” center in Tel Aviv. It relies on 330 local content creating freelancers that produce about 3,000 articles, videos, and visual works a month.
It said its website drew 15 million unique visitors a month and claimed that its videos were played more than “a billion” times last year. It said it had done this without relying on gaming Facebook or other social media platforms to lure traffic.
The startup claimed year-over-year quadrupling in traffic to its content. It said search engine traffic, mainly Google, is its main referrer. It has built in-house a recommendation algorithm that directs readers to other content they might like.
For now, the company’s main revenue drivers of sponsored content and affiliate links (where the company earns a commission when readers click through to an advertiser’s site) are not revolutionary models.
The company is not without some competition. TRVL, a company that enables people to be home-based travel agents — taking a cut along the way —received $3.7 million in a Series A from undisclosed investors in March, 2018. It enables people to sell travel and split commissions.
The model has also been attempted, in various guises, by Matador Network, Handstand, and Lonely Planet. Print magazine publishers like Afar, Airbnb, Away (the luggage maker), Travel and Leisure, Conde Nast Traveler, and National Geographic Traveler also have digital efforts that attempt to make money off of editorial content in ways other than display advertising.
Feel like you’re missing out on a media and startup gold rush? Possibly fueled by the peak of economic cycles after years of low inflation and arguably excess government stimulus in North America, Europe, and China? One option may be to invest in the stocks online travel companies that run affiliate networks like Expedia Affiliate Network, which power some of these efforts.