B2C versus B2B travel startup funding tells an interesting story

Funding to B2C travel startups always outpaces B2B because of the investments needed for consumer businesses to scale.

But the share of B2C versus B2B funding tells an interesting story – it has trended toward B2B companies for years, and in 2021 B2B funding hit its highest share ever, at 39% according to Phocuswright’s travel research report The State of Travel Startups 2022.

This was in part due to $3 billion going to the top four urban transportation companies in China, which all operate on a B2B basis: WeRide ($1.5 billion) HT Aero ($500 million), Deeproute ($500 million) and Momenta ($500 million).

In terms of the number of deals, B2B continues to gain share, even into 2022.

Although B2B company revenue typically never reaches the lofty heights of B2C juggernauts, their relatively predictable, steady revenue became much more attractive to investors during the uncertainty of the pandemic.

Additionally, B2B companies may have better captured attention from potential customers and partners, as openness to technology use for increased efficiency and automation increased in corporate boardrooms across the world.

Furthermore, scaling a B2C startup is only getting harder: SEO/PPC, social media and influencer campaigns were low-hanging fruit for smaller consumer companies, but they all appear to be saturated now, pricing out most smaller companies.

In addition, the sheer volume of options produces a noisy and distracting landscape, making it more difficult for B2C companies to cut through and reach the consumer. On the other hand, dozens of programs and investors have focused on facilitating B2B startup introductions and business deals in the past decade, providing a supportive infrastructure for B2B companies.