In our latest report, Skift Research looks into venture capital investments in travel startups. The global coronavirus pandemic was the deepest crisis the travel industry has ever faced but the silver-lining of situations like these is that they can be a catalyst for generational transformation. This presents a target-rich environment for venture capitalists looking to back impactful new technologies and businesses.
The below excerpt focuses on Skift Research’s analysis of special purpose acquisition corporations that rose in prominence this year as a new way to invest in startups. Get the full report here to stay ahead of this trend.
This year is likely to be one of startup exits, a rebound from the low number of transactions closed in 2020. Airbnb proved that the initial public offering market is red-hot for the right businesses and on the mergers & acquisitions side, both strategic corporates and private equity investors alike have expressed their desires to expand into new markets and consolidate in existing territories.
Also adding to this acquisitive environment is the rise of special purpose acquisition corporations (SPACs). These unique investment vehicles reverse the typical initial public offering process. A SPAC raises money upfront in an IPO with no operating business but plans to use investor’s cash to acquire a privately held company, effectively taking that target firm public. Investors are effectively writing the SPAC a blank check as most have broad leeway to acquire any company it sees fit.
Skift Research, as part of our latest report on venture trends in travel, has identified at least 21 SPACs that we view as likely to target acquisitions in and around the travel sector. These vehicles have raised more than $7.4 billion to pursue M&A, much of which will likely be deployed in the next 12 to 24 months.
Some of these SPACs explicitly target the travel sector, such as Thayer Ventures Acquisition Corp., backed by long-time travel venture capital specialist, or any of the three Altitude Acquisition Corps., run by Gary Teplis, CEO of or corporate travel agency Teplis Travel
Others are more subtly shopping around the travel sector. Take the case of Centricus Acquisition Corp. — it has a broad remit to invest in “any business, sector or geography,” not travel specifically. But the company intends to capitalize on its management teams’ network and Centricus’ Chairman of the board is Manfredi Lefebvre d’Ovidio who ran Silversea Cruises from 2001-2020. d’Ovidio is also a majority owner of high-end tour operator Abercrombie & Kent. Given d’Ovidio’s extensive travel expertise, we expect to see this SPAC engage in talks across the travel and leisure sector.
Already, at least six SPAC deals have been closed in the travel and transportation sector. Most have focused on advanced transportation technology, including space travel and electric vertical take-off or landing (eVTOL) aircraft, with $1.7 billion of SPAC capital invested in transportation startups in just the month of February 2021.
However, we expect future SPAC deals are likely to shift towards broader travel and to focus on technology, e-commerce, and brands. Indonesian online booking and travel unicorn Traveloka is reported to be considering an IPO this way. Corporate travel and hospitality are likely to be targeted sectors as well based on the backgrounds of sponsors.
All of these deals could help drive renewed enthusiasm for investing in and founding companies within the travel space and we remain optimistic about the future of venture capital in the travel industry.
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