A wide range of
investors have been pouring money into travel startups over the past several years,
with record funding of just under $11 billion in 2021 alone.
The majority of
this funding has come from venture capital firms, followed by private equity.
According to a new report from Phocuswright and McKinsey, between
2015 and 2019 VCs and PEs invested at least twice as much per funding round
compared with travel companies.
McKinsey
partner Nina Wittkamp and associate partner Evgeni Kochman say this is an
indication that travel companies are missing an opportunity: by investing in and
collaborating with startups, travel companies can position themselves to capitalize
on innovation and to shape the future of the industry.
And, said
Wittkamp, this type of collaboration can help startup founders break through
some of the barriers that continue to exist in the industry due to legacy
structures, ultimately driving real change that is needed.
“There still
is a lot of legacy in the travel sector that is being optimized, but we’ve not
seen as much real disruption and changing of the system,” she said.
“So there is
still a lot of room for growth but also real disruption in the actual business
models and types of players that we’re seeing.”
In a
conversation with PhocusWire editor in chief Mitra Sorrells to discuss the report,
Wittkamp and Kochman explain more about opportunities for startups to
strengthen the travel and tourism value chain.
And they
share three possible future scenarios for travel startup funding, based on
their analysis of recent trends.
Watch the
full discussion below.