What Utrip's Tragic Final Year Can Teach Other Travel Startups

Trip-planning startup Utrip, which raised $4 million from investors in 2017, shut down this May. Several employees and investors are still puzzling out what went wrong, including the mystery of why its acquisition by a larger company fell through at the 11th hour. Utrip's failure offers some important lessons for other startups in travel. These include a need to prioritize the drivers of fast revenue growth and a need to bring street smarts when seeking an acquisition by large suppliers or tech companies. Back in February 2017, Utrip's Series A round underscored investor faith that the Seattle startup had found a business model that worked. The company provided recommendations on things to see and do after collecting a few basic facts about a traveler. The more information consumers volunteered — by using its consumer and third-party tools — the more accurate its predictions became. Utrip signed up partners to use its tools, including Starwood, JetBlue, and Holland America as well as destination marketing organizations like New York City & Company and Visit Las Vegas. The Revenue Question In early 2018, Utrip sought another funding round of about $8 million. At the time, its performance was mixed. The company was at its peak, with about 80 clients providing recurring revenue from licensing with a claimed low cancellation rate. However, many of those clients had small budgets and only engaged in limited use of the product. The company wasn't profitable. But it thought it had a path to profitability. It aimed to flip clients from tests into full usage. It was already gaining traction with clients with bigger budgets, too. The company felt caught in a bind, though. It needed funding to fuel both sales and marketing and data science work. But its early pilots generated little revenue. Venture capitalists balked at a Series B. They wanted to see more recurring revenue and a faster pace of growth in that revenue. "We heard from the VC community that when they compared our revenue against A.I.-based startups in other industries like finance, the revenue started much higher," said CEO and founder Gilad Berenstein. To learn more details, Skift communicated with a handful of investors and former employees who spoke on a condition of anonym