What’s Next for Leading Travel Tech Investor Thayer Ventures?

You can’t write a weekly briefing on travel tech without eventually covering Thayer Ventures.

• No other traditional venture capital firm based in the U.S. has bet on more travel startups in the past decade than Thayer has.
• This year’s annual meeting of Thayer’s limited partners drew no less of a star than Anthony “Tony” Capuano — CEO of the world’s largest hotel company, Marriott International. The private gathering in Washington, D.C., took place last week.
• Thayer’s lead trophy investment is Sonder. The hospitality startup is expected to go public soon at more than a $2 billion valuation via a special purpose acquisition company.

I believe a few Thayer portfolio companies have the most potential to someday reach Sonder-levels of valuation. These are:

• Inspirato, a subscription-based luxury travel company offering vacation rentals and apartment stays worldwide. This year, blank check company Thayer Ventures Acquisition Corp. plans to merge with in a deal with an enterprise value of $1.1 billion.
• Life House is a tech savvy hotel operator that touted impressive growth when its CEO Rami Zeidan spoke at a September industry trade show in Dallas. Thayer led a $30 million round of Series B funding in the startup in 2020 out of the firm’s approximately $80 million fund. It has unicorn potential.
• Mews, a private company that offers next-gen lodging property management, doesn’t reveal its financial performance. But I’ve heard from many industry players that it appears to be having a fast revenue growth rate despite the pandemic’s hit to the hospitality sector.

Of course, other Thayer portfolio companies have potential. A couple of examples:

• Some investors speak highly of May Mobility, which is building autonomous vehicles and which has partnerships with Toyota and other major players.
• Other investors I spoke with like Beekeeper, an operational communications platform for hourly workers.

Last week, I caught up with Chris Hemmeter, managing director of Thayer Ventures, to find out his views on a few things:

• Where Thayer see opportunities.
• Diversity, equity, and inclusion in the startup sector.

Thayer has many portfolio companies based in the U.S. But Hemmeter says it is also looking internationally.

• “We have made two investments in LATAM [Latin America],” Hemmeter said. “We continue to look there.”
• “We’re actively looking at deals in Europe, where we already have Mews and Beekeeper,” Hemmeter said.
• “We have looked at several opportunities in APAC [Asia Pacific],” Hemmeter said.
• “We haven’t pulled the trigger yet, but we’ve got close on a number, particularly, Singapore domiciled companies.”

I asked Hemmeter what has to happen to improve venture capital’s record on issues of diversity, equity, and inclusion. For example, women represented only 13 percent of U.S. venture-capital investors in 2020, according to an analysis by the nonprofit All Raise recently cited by the Wall Street Journal. Representation among many other minority groups is generally worse.

• “I’m absolutely horrified at the performance of the industry,” Hemmeter said. “In our case, what’s the saying? ‘The emperor has no clothes.’ We’re not doing much better.”
• “We absolutely have foundsome phenomenal female executives, such as the CEOs of Beekeeper, Dishcraft [which picks up dirty dishes from hotels and efficiently cleans them], Redeam [a tours and activities tech services startup], and Optii Solutions [a housekeeping solution for hospitality operators],” Hemmeter said. “But we’re nowhere near parity.”
• “Speaking big picture, there’s a lot of diversity theater out there,” Hemmeter said. “But frankly, if you think about the giant pools of capital that drive the industries of private equity and venture capital, they’re only choosing funds to invest in based on internal rate of return and return on capital.”
• “Most investors aren’t truly counting diversity, equity, and inclusion as a decision point for where and whether to invest,” Hemmeter said. “Until the metrics change, it’ll be very unlikely that you’re going to see change at scale in the venture capital and private equity industries.”

Before the pandemic, many corporate venture capital firms were sweet-talking travel startups. I asked Hemmeter what has happened since.

• “Direct CVC [corporate venture capital” has mostly been either bailing out or on pause,” Hemmeter said. “I’m not counting strategic innovation teams.”
• “I’m referring to the big formal CVC practices that came along with overhead,” Hemmeter said. “When all of a sudden the world goes, gosh, you know, CFOs [chief financial officers] have to make decisions, and sometimes the long term capital for a venture group falls victim. That is really bad for entrepreneurs who counted on those companies to be around for the long haul.”

Thayer is bullish on travel tech, despite nosebleed valuations for some companies and the unpredictable geopolitical dynamics in the post-pandemic era.

• Hemmeter noted that his firm’s time horizon is typically six or eight years for an investment, so short-term market conditions don’t concern him too much.
• “At the end of the day, what drives our enthusiasm is the engagement with startups and new technologies across the value chain in travel levels that we’ve never, ever seen before,” Hemmeter said.
• “I admit we have passed on many interesting companies because of crazy valuations,” Hemmeter said. “But broadly speaking, as far as early stage venture investment in travel startups, I was at a 10 out of 10 level of enthusiasm right before the pandemic and I’m a 12 out of 10 now.”

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