A lot of questions need answers right now, and those startups with the correct ones will make their mark once the pandemic is over. The entrepreneurial spirit is needed now more than ever.
You’d expect corporate travel startups to suffer a similar fate to their bigger, more established counterparts. That’s not quite been the story so far as more modest scale serves some benefits.
Their smaller size means they’re taking advantage of their agility, while new technologies are sought after as travel companies figure out their next move. Their biggest worry now, however, is convincing investors to hand over the cash.
BUSINESS AS USUAL
Disruptors by their very nature have a strong technology focus, so weren’t caught out adapting to the new world of remote working. Startup club Voyager HQ shifted seamlessly to virtual for its inaugural “Corporate Travel Pitch Night” at the end of March.
Voyager HQ specializes in the travel, tourism, and hospitality industries, and despite the crisis, it plowed ahead with its event to hear from innovators in the corporate travel space.
The club, which has 2,000 entrepreneurs across 430 cities, said the event was a success with participants tuning in from all over the globe, and post-event took part in a “networking hour” on Slack.
Voyager HQ is unashamedly addressing the Covid-19 pandemic head on. “We believe there’s no better way to approach these challenges than by gathering like-minded innovators to share information, advice and feedback,” it said. “More questions and concerns have arisen than have been answered in recent weeks, especially around when, where, and why people will begin traveling again — and how startups and large travel companies can continue to create revenue and bring value during this time.”
Pitches were made by Okaya, Reconcile, TroopTravel, FootprintID and Timeshifter. BCD Travel’s Miriam Moscovici, Goldman Sachs’s Seth Goodman, TripActions’s Laura Mighdoll and Lyft’s Caitlin Gomez made up the judging panel.
The audience and judges voted for TroopTravel, which uses big data to help travel and event managers make informed decisions when planning and booking group travel, meetings or events. It won business services and tools worth up to $30,000 in value.
TroopTravel no doubt values the recognition — but what is business actually like? Founder Dennis Vilović told Skift it’s one of many startups bucking the bad news trend, seeing a surge in demand.
“Since the outbreak of Covid-19 we have tripled our customer-base of Fortune 500 companies,” he said. “We attribute this traction to the globally imposed travel restrictions creating a zero position, and giving travel buyers the opportunity to focus on new strategic initiatives.
“These astute travel buyers are transforming this global negative into a positive, and layering in new solutions to be prepared to run into the new normal, when travel is back on.”
Traxo, meanwhile, claimed it also played a role helping travel managers through the crisis. Andres Fabris, CEO and founder, said: “We already had a pretty strong value proposition for our clients, helping them aggregate both their corporate travel agency and off-channel leakage bookings so they could monitor duty of care blind spots and capture potential spend savings.
“The pandemic really put a boldface, double-underline on that value proposition, since Traxo was the only tool corporate travel managers had immediately available to them to help untangle the situation of which employees were in, or had recently been to, a Covid-19 hotspot.”
He added that as early as January, when the outbreak was in its earliest stages, it was helping clients identify employees who had booked travel outside their corporate travel agency to or from China during the January and February time frame, so they could determine if any were potentially exposed to the virus and needed quarantine or had to cancel upcoming trips.
Another startup, Las Vegas-based Trip Concierge, claimed it has seen a fourfold uptick in subscriber numbers over the past few months, equating to a 50 to 60 percent increase in revenue for the first quarter.
The corporate travel booking platform has 1,800 companies registered with it since pivoting from the leisure sector in 2018. It charges a fee per user, and earns commissions from suppliers. With an affiliation to the Travel Leaders group, it’s able to leverage a large number of experienced travel advisors and buying power.
“There was certainly a short-term game in terms of revenue, and a long-term gain because we bill on an annual basis,” said CEO Thomas Schneider. “Those people are going to be with us for the next 12 months.”
The company says its core operations are solving complicated travel problems that arise due to weather, airline operational issues and more recently pandemics.
“Our strength is helping in exactly these kinds of situations, and having gone through this crisis we’re really certain of our product market fit. We’ve found our niche: mid-market companies that don’t want stress and anxiety in their travel,” Schneider added.
Taptrip is another startup making good. “We’ve certainly found an increase in demand from corporate travel agencies that need more automation and to drive more bookings online,” said Neil Ruth, co-founder and chief commercial officer. “Covid-19 has shown the offline model strains in these situations and highlights a lot of inefficiency, given currently over 55 percent bookings happen offline. In addition, they are looking at ways to reach the SME market to drive up lost revenues from a segment of the market that they’ve previously been unable to reach with alternative, expensive and overdeveloped online booking tools.”
While these startups stepped in to offer a form of crisis management, others are discovering that suppliers now have more time to engage with them, and are more willing to trial new systems and platforms that might give them an edge once travel returns.
Kyte, which is part of the Founders Factory, is an aggregator that connects with airlines to provide rich NDC-based content to travel companies and Amy Grimshaw, head of PR and communications at the Founders Factory, said it is gearing up for new business.
“In corporate travel, there was that immediate shock, but there is now also medium-term thinking around the work that needs to be done to prepare for when travel comes back, and how systems are maintained. Kyte, which was built from scratch inside the Founders Factory studio, makes it easier and cheaper to access inventory at scale.”
“Some airlines that we were in talks with have put a pause on the project, but we’ve had some airlines we’ve never managed to work with in the past come back to us,” said its founder, Steve Domin. “They’re saying agencies are no longer taking up integration slots, so if we want to do an integration with them, now is the time.
“We were lucky that we raised our series A and B funding last year, so we have lots of cash in the bank, and we’re maintaining our hiring plan. We’re looking at the learnings over the past few weeks, and putting them into the software. We’re in a good position, but just waiting for the recovery.”
It’s not all good news, though. While the entrepreneurial spirit is alive and kicking, many investors will be spooked by the travel industry’s precarious situation.
“Investment has certainly slowed,” Taptrip’s Ruth said. “Not just in travel, but across the entire startup sphere. In travel, there is and will be a lower risk appetite given the situation. The UK government certainly has an obligation to step up and protect vulnerable startups.
“The business interruption scheme does not apply to loss making businesses, so it does not protect the majority of startups who are deliberately loss-making. Founders Factory, an investor of ours, and the team behind it have suggested a ‘Runway Fund’, recently cited in the Financial Times, to give time to early stage businesses using convertible loan notes of up to £500,000. This would help extend runway and would convert to equity at the next investment round.”
Elsewhere, on Monday equity crowdfunding platform Crowdcube launched a campaign and petition called Save Our Startups and has warned that entrepreneurs “are being forgotten” during the crisis, which threatens the future of the UK’s startup industry.
“The crisis has made startup funding harder to come by,” admitted Cat Jones, managing director of travel and media sectors at Founders Factory. “Some investors are struggling to have confidence in the market. But the hardest thing is opening up new conversations with investors, for those companies going out to start a new round.
“Investor appetite has taken a hit. There are still people making investments, and we are still looking for founders. It’s about knowing who is interested, and what they are interested in. Yes it’s harder, but it’s not impossible. And some investors are doubling down to make sure their companies have enough cash to get through the crisis.
Jones’ role is to source investments in early stage startups, and run programs that plug them into its network of corporate partners and advisors. “I’ve been pulling together an advisory network in the background over the past few months, and it’s been amazing to see the renewed energy that network has got coming around the various startups,” she said.
Jones is particularly conscious of the impacts the crisis is having due to her own personal project, codenamed “Meander”, gearing up for launch. Meander is a booking platform that promotes slow travel, and will launch for the leisure sector in the next couple of weeks, with a corporate product to be made available soon after. It will be available for corporates to use direct initially, with corporate travel agencies to follow.
She believes the business could prove popular for those business travellers wanting to travel more sustainably after the crises — a theme that reflects how startups are being encouraged to hold back on pivoting, but think of a change of emphasis in the future. “What we don’t think is — there’s never going to be any travel anymore. We know it’s coming back. Startups don’t want to lose the core of their product.”
“Take time to figure out what your customer really wants now, or six months from now, and based on that build your product, and test it. Find that product market fit, and if the market has changed, whatever your initial assumptions were, you’ll have to rethink your product. If it doesn’t still fit, you’ll have to pivot,” Trip Concierge’s Schneider added.
Skift also heard from one entrepreneur that has put things on hold for the moment. Cloud Trip is an end-to-end business traveller corporate tool that “focuses on simplifying the booking process and expense management”.
“We were due to launch during the crisis but we are moving the launch date back to July,” founder Ammar Boukhemkhem said, adding he thinks it will be at least a year before businesses recover.
But Traxo’s Fabris believes the current environment can only spur on entrepreneurs.
“As we’ve seen in past economic crises, plenty of strong companies were founded during recessions. Startups who grow up having to run lean have a distinct advantage over those who haven’t had to fight as hard for survival. There’s no reason this time should be any different,” he said.
“There is always smart investor money available for outstanding ideas.”
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Photo Credit: Founders Factory supports startups with mentoring and helps them meet the right investors. Founders Factory