In many ways, any announcement of a startup getting funding in recent months has been a symbol of hope.
Hope that travel will live on and adapt to whatever the so-called "new normal" is.
While overall rounds may be smaller, and seed funding much harder to come by, several $100 million-plus investment rounds still emerged in 2020.
Phocuswright’s recently released annual State of Travel Startups report reveals a 50% decrease in the number of debut funding rounds in the first half of 2020.
Meanwhile, follow-on investments were down 26% year-on-year, demonstrating that the appetite to invest in travel remains.
Additionally, funding into B2B startups has outstripped that of B2C companies for the first time - hardly surprising, given the massively diminished consumer travel landscape in 2020.
Below, we detail some of the standout funding rounds in travel startups this year:
While taxi-hailing and ride-share businesses attracted a lot of attention from the venture capital community last year, 2020 has been more about the last-mile startups.
Most recently, Sweden’s e-scooter company Voi landed a $160 million investment, calling 2020 a “landmark” year for e-scooters in Europe.
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Voi has company in the micro-mobility segment, with TIER following up an investment of $100 million, announced in February, with a further $250 million Series C in November.
Even before the pandemic hit, the drive from consumers for easily accessible transport such as bikes and scooters was lifting the ground transportation segment overall, with Bengalaru-based Bounce attracting $105 million in January.
Startups covering ride-hailing, as well as those combining it with food delivery and other services, have also faired well during the pandemic.
Grab announced a $865 million round in February, Didi added $500 million in March to develop autonomous driving technology, VIA added $100 million also in March and Bolt (formerly Taxify) announced €100 million in funding in May and a further $150 million just this week.
Additional notable rounds in ground transportation include a $100 million investment in Gett in July, a $100 million round for multimodal platform Omio in August and $150 million in funding for Indonesia’s super app GoJek last month.
Despite more caution from the VC community generally, travel and mobility startups in Asia have received more than $8 billion in funding in 2020, according to a report from Lufthansa Innovation Hub, with the majority of that pumped into mobility.
While much of the heat around investment in the private accommodation segment has died down, with the exception of excitement about Airbnb’s IPO, there have still been some notable rounds.
The venture capital community remains positive about the private accommodation space, which has been a shining star over the course of the pandemic in terms of demand.
The demand is predicted to continue, with online travel companies such as Booking Holdings, Expedia Group and Tripadvisor considering the ongoing opportunity and getting more supply onboard.
In terms of funding rounds in 2020, Airbnb secured $1 billion in April, Sonder raised $170 million in June and Mexico’s Casai announced $48 million in October.
On a smaller scale, The Guild attracted $25 million in January, and LimeHome added an additional $10 million to its Series A recently, having initially announced a $21 million investment back in March.
A surge in demand for vacation rental homes has boosted many of these startups in 2020, although those with a heavy urban focus have been less fortunate.
Back in July, Chris Hemmeter, managing director of Thayer Ventures, an investor in Sonder, said that in a few years the pandemic will be seen as having accelerated the growth of the private accommodation space.
All signs continue to point to its continued growth.
All estimations are that corporate travel will not come back to anything like the same levels as 2019, with predictions for the segment to be down longer term anywhere from 15% to 50%.
And yet some startups in the space have managed to attract significant funding, despite the bleak outlook and many large corporates touting the benefits of virtual meetings, letting offices go and keeping travelers off the road for the foreseeable future.
TripActions maintained its funding momentum with the announcement of a $125 million round in June, having announced investment of $250 million a year before and $154 million in November 2018.
Others in the space have also managed to close rounds, with Comtravo and Lanes & Planes, both based in Germany, announcing €9 million and $10 million in funding, respectively.
Meanwhile, Shanghai-based Huilianyi revealed a $42 million investment in March and could be well-positioned to benefit from the already-recovering travel market in China.
And Itilite, an India-based business travel startup, attracted $13 million in Series B funding in April.
Fintech and travel
Many startups have seen opportunity in the COVID-19 crisis and built up their businesses around more pressing consumer needs such as insurance and funds to pay for travel.
Bright lights include Battleface, which recently announced a $12 million round to expand its travel insurance platform, and Fly Now Pay Later, which landed £35 million in May and hopes to raise a Series B round early next year.
Payments startups have also been given a boost, with ConnexPay recently announcing a $6 million top-up to its Series A round and the pandemic expected to accelerate digitalization in the space.
SPACs, space and other sparks
In recent months, three travel-focused Special Purpose Acquisition Companies, or SPACs, have emerged.
SPAC companies, which in travel include Thayer Ventures Acquisition, Altitude Acquisition and GO Acquisition, target high-growth companies that are often ready for an IPO, sometimes merge them with others and give them a faster route to market.
Goldman Sachs said earlier this week that SPACs could be the vehicle for $300 billion in merger and acquisition activity over the next two years.
Longer-term bets might come in the development of air taxis, with companies including Joby Aviation ($590 million) and Lilium ($240 million) both attracting large rounds in early 2020.
And, let’s not forget continuing efforts to get to the edge of space and beyond: Space Perspective, which announced $7 million investment in recent weeks, expects to launch its test flight in early 2021.
All bets are off
As the industry moves into 2021, it’s hard to predict what will happen in travel startup land.
The playbook has been thrown away, and past behavior is no longer something to rely on, at least for the short to medium term.
There will be merger and acquisition activity: Big online players are already eyeing opportunities, and well-funded startups may acquire others that have struggled in the pandemic.
The private accommodation segment will continue to thrive, with more funding likely to be ploughed into startups in the space.
The B2B travel technology space will likely see further investment as well, while the target travel companies of SPACs and how that trend develops are also ones to watch.
Other notable rounds in 2020:
* Check out this episode of the InPhocus podcast, where we talk to Phocuswright's Mike Coletta about the State of Startups report, recorded in earlier this month.