Travel startup funding and M&A activity in Q1 2024

After a down year, funding for travel startups has increased in the first quarter of 2024, even as the number of actual rounds is down.

Phocuswright's Travel Startups Interactive Database put the funding that went into new entrants in the first three months of the year at around $1 billion, a big step up from 2023's first quarter figure of around $420 million.

Significant rounds went into mobility companies such as ride-hailing company InDrive, $150 million, and in Nigeria-founded Moove, a company providing finance to purchase vehicles, which received $100 million in Series B. Meanwhile, Heart Aerospace landed $108 million to help develop its hybrid-electric plane and Cosmic Aerospace announced a seed round of $4.5 million.

In micromobility, Voi attracted a further $25 million for its e-bike and e-scooter operations, although other companies in the space, including Bird, which entered Chapter 11, did not fare so well.

Another area that continued to attract investors was the vacation rental space with technology-led apartment rental company Bob W getting €40 million in a Series B round while vacation rental startup Overmoon announced $80 million in equity and real estate debt financing. Blueground, a provider of flexible, furnished rentals, announced $45 million in a Series D round just as the quarter was drawing to a close.

Hotel technology also got a look with Mews landing $110 million at a valuation of $1.2 billion while South Korea's Onda announced $10 million in Series B funding.

On the current funding environment for travel startups, Mia Morisset, principal at Inovia, said: "So far, deal flow activity in travel and hospitality for 2024 has definitely rebounded compared to last year, especially at the later-stage front. Now that companies have strengthened their business fundamentals, they are ready to proactively push for efficient growth. We've seen more actionable growth opportunities in the past three months than in the entire last year, including our recent investment in Guesty's Series F."

Akhil Chainwala, investment director at Kinnevik, agreed with Morisset, and said: "We have seen a thawing in the market for late-stage private companies driven by three factors – increased scale as businesses have grown into their valuation marks, improved efficiency and profitability following two years of cost management, and a more normalised travel macro environment with greater predictability. Companies that can show they benefit from a post-AI future are particularly seeing greater interest from investors."

Kinnevik led the recent round in Mews and participated in TravelPerk's Series D1 round of $104 million.

The corporate travel space has been undergoing interesting changes in the past couple of years with newcomers entering the fray, distribution developments and significant consolidation. Spain-based TravelPerk announced its Series D1 funding of $104 million, while Tumodo, based in the United Arab Emirates, raised $35 million in a pre-seed round. Seeru, also based in the UAE, raised undisclosed pre-seed funding.

Further notable rounds in Q1 of 2024 include €100 million for Visit Group from PSQ Equity, which now holds a majority stake, $10 million for Daytrip and $8 million for social commerce service Joyned. Smaller rounds were peppered throughout the quarter including Lokalee ($5.6 million), Holdbar ($3.5 million), Nicer ($2 million) and Runnr.ai with €1 million.

One further bright spot in Q1 was the announcement of a travel technology fund for Europe called TravelTech.vc. The company announced in January that it was looking to invest €50 million in 10 companies.

Acquisition trail

Consolidation was also a big part of Q1 with American Express Global Business Travel's announcement of its plan to acquire rival CWT for $570 million the standout news. Some have already said 2024 could be the biggest year ever for mergers and acquisitions in travel technology.

"A wave of inevitable consolidation following COVID needs to take place whilst at the same time high interest rates have stalled startup fundraising, leading to people having to merge or face closing,” Morgan Lesné, travel lead and partner at Cambon Partners, said recently. “Meanwhile record tourism figures for 2023 and a very positive outlook for 2024 are leaving many players feeling confident that now is the right time to acquire competitors.”

Reports from Morgan Stanley and PWC, while not specific to travel, also indicate the likelihood of increased M&A activity in 2024. PWC said improvement in financial markets, pent-up demand for deals and "the need for many companies to adapt and transform business models" is driving dealmaking.

Regarding hospitality and leisure it added, "While hospitality and leisure dealmaking showed declines in both deal volumes and values in 2023 compared to the prior year, we expect the return of tourism to pre-pandemic levels and consumer preferences for experiences will increase the flow of businesses coming to market in 2024."

Distribution giant Amadeus has had an active quarter on the acquisition front with its purchase of biometrics specialist Vision-Box for €320 million in late January and payments specialist Voxel for €118 million in March.

Further M&A activity in Q1 included IBS Software's acquisition of Above Property Services for $90 million, AirDNA's purchase of Uplisting, Gray Dawes' acquisition of Dutch travel management company VCK Travel, Lighthouse's acquisition of Stardekk, Busbud's acquisition of Buson and the merger of micromobility players Dott and Tier.

A final word on funding and M&A activity in the quarter is devoted to the companies that didn't make it. Journera, which was founded in mid-2016 as Dihedral and had raised about $36 million, announced it was shutting in early February. Its story, as told by founder Jeff Katz, can be read here. Meanwhile, Cabana, a camper van rental startup that raised more than $10 million, suspended operations in early January. Its founder Scott Kubly shares lessons learned here.