Pandemic-battered 2020 has not been a happy place for the travel, tourism and hospitality industry, with every corner of the market impacted.
The travel startup landscape has also not escaped the grim effects of layoffs and the huge drops in demand from travelers and demands for new technology and services from partners.
After 2019, a year in which $7.4 billion of investment went into travel startups, activity this year was inevitably going be way down in most of the main measurement metrics.
Phocuswright's annual State of Startups Report, which has tracked the digital travel startup landscape since 2009, is expecting about half the amount of funding to come the way of startups in 2020 when compared to the previous year.
There is a "half full or half empty" argument to be made here given that for a substantial part of 2020 there has been little to no numbers of travelers in the skies on airlines or in accommodation providers.
Phocuswright's latest analysis of the startup market found fewer angel or seed rounds are harder than ever to broker.
The number of debut funding rounds in the first six months of 2020 were down around 50% on the same period in 2019.
Still, follow-on investments came in at down 26% over the corresponding period a year before, meaning investors are supporting startups in their existing portfolio rather than taking a bet on new ideas and businesses.
There is a notable shift this year, too, with investments into business-to-business startups outpacing consumer-facing brands for the first time on record - an inevitable outcome given the squeeze on companies with limited travel actually taking place this year.
Mike Coletta, Phocuswright's manager for research and innovation who also oversees the State Of Startups report each year, says there were 24 acquisitions in the market in the first half of 2020 and if the rate continues then acquisition activity could surpass the 44 that took place in 2017, 2018 and 2019.
This seemingly high figure is likely due to the number of pandemic-hit companies that have become available at favorable prices for buyers through a range of fire sales and acqui-hires.
Phocuswright conducted a survey of its startup database this year for the first time, to get a sense of the financial state of many of the companies that it tracks.
Most of the companies say that they have less than a year of runway in the bank - again, a half-empty/half-full assessment is required - and most believe that they will survive longer than 12 months.
The short-term rental startups reported a median positive year-over-year revenue change from 2019, the report found.
* To go through the results in detail, PhocusWire spoke to Coletta for this week's InPhocus podcast and is available below. InPhocus is produced in association with Allianz Partners.
State Of Travel Startups 2020
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