While startup challenges are not unique to travel, some of the underlying technologies and fundamentals of the industry create larger barriers that travel startups must overcome to succeed.
To add to the challenge, most of the time, the first idea is not the one that ultimately succeeds, so it is essential to fail fast and pivot early.
Then there is competition. Customer acquisition challenges. Convincing an industry corporate to move ahead with a trial of the product. Executing the technical requirements and getting the commercial buy-in from all the different stakeholders, which is extremely time-consuming.
Now insert a near-shutdown of the industry due to COVID-19 this year and you can multiply the challenges tenfold.
But it's not all doom and gloom. Travel startups are still raising money, and many have figured out a new path to get them through this year and beyond.
Phocuswright Europe 2020's innovation competition (see the pitches and other coverage here) also saw its "Dragons" convene for a discussion about the state of the startup nation, mid-pandemic.
The panel: Suzanna Chiu (Amadeus Ventures), Sascha Hausmann (HOWZAT Partners) and Feargal Mooney (Meetingsbooker.com).
Below are 15 points from that discussion and our additional commentary - all of which every travel startup should be considering as it looks at the remaining months of 2020 and what might be in store for the year ahead:
- Travel startups can perform miracles when needed. They are more nimble than their larger competitors and should consider the "pivot" when needed.
- Ensure the product fits the markets, especially as the market shifts in the wake of changes in consumer behavior and restrictions of travel.
- Embrace new technology to solve problems (but only when the technology makes sense).
- Be prepared to demonstrate a clear path to revenue when dealing with investors. Turn your bright ideas into ones that have solid financials.
- Consider niche pockets of the industry as the best places to find opportunities. Many aspects of the travel ecosystem are already dominated by giant high-spending companies.
- Ground transportation is still largely ignored by the established players in the industry. It remains ripe for disruption.
- Blockchain technology is not a panacea. Its use so far is to try and solve things that are fundamentally not broken.
- The paperless travel experience is a genuine opportunity now, rather than just a showcase for new technology.
- Hygiene-based products will be important for the considerable future, even beyond a vaccine for the coronavirus, with brands and travelers acutely conscious of the importance of health and safety.
- Don't be disheartened by a lukewarm investment market - some funding deals are happening, albeit the rounds are now smaller than pre-pandemic.
- Beware of large funds being thrown at businesses just to sustain coronavirus-hit cost structures. Take money to support innovation, not finances.
- Deals are getting done by investors that already know the founders. Travel restrictions are hampering the meet-and-greet that some finance houses insist on, even with videoconferencing the current norm.
- "Snake" investors still exist and are ready to pounce on hungry, early stage startups.
- Know the customer and create the best illustration of the unit economics required to capitalize on their existence (that gets a startup to profitability).
- Cut away the dross in the organization and find new ways to be efficient in everything that the business does, leaving behind better processes and structures.
* See below for the full panel discussion.
Post Game Wrap Up - Innovation Summit Dragons/Judges - Phocuswright Europe Online 2020