Trend 6: Tightening Venture Capital (VC) funding pushes for better industry start-ups

If you follow the start-up ecosystem even a little bit (not just in the travel industry), you’ll have heard that venture capital firms are withholding capital as valuations fall and economic headwinds slow growth in 2022. And that 2022 was a year of reckoning for the VC industry.

Early funding rounds in particular were influenced by the more conservative approach of investors who, perhaps under the impact of the pandemic, turned to start-ups with a proven market fit – and possibly a real, working product that delivers measurable added value.

Phocuswire has a good summary of travel startup trends here. It mentions the surprising fact that despite the impact of the pandemic on the business travel segment, some startups in this space were still able to attract investment. To me, this means two things: first, it shows the impact of blended business and leisure travel, and second, that startups with a good market fit and a working, impactful product are still likely to get funded.

Recent months have also seen €1m invested in UK-based Hotel Manager, €5.3m in Greek startup Welcome Pickups, €30m in Spanish travel tech startup Lodgify and €20m in another Spanish startup called Exoticca. Arguably the most eye-catching investment, however, was that of £185m in Mews Property Management Systems.

Investors have become demanding and therefore it has become more difficult to raise money, but there is still enough activity to indicate continued investment.

Skift sums it up really well – “Sometimes raising investment is hard, and sometimes it’s harder. But that’s no reason not to move forward — a product that’s strong and needed will still sell.”

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Tags: Distribution Trends 2023

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