TourRadar: Inside the 50 Million Dollar Deal
TourRadar is, as reported, one of Austria´s most successful startups. Founded in 2010, its founders Travis and Shawn Pittman today have announced a 50 million dollars Series C, led by TCV with participation from existing investors Cherry Ventures, Endeit Capital, Hoxton Ventures and Speedinvest. In connection with the funding, Erik Blachford, a venture partner at TCV, has joined TourRadar’s supervisory board. The startup with 130 employees offers 25.000 multi-day tours in 200 countries on its booking platform. The team intends to use the funding to expand its team globally and will be investing in the technology platform. TourRadar wants to provide a personalized user experience for customers in new and existing markets.
The investment is an extraordinary one and one of the biggest funding rounds an Austrian tech company ever raised (see table below). Trending Topics sat down with TourRadar CEO Travis Pittman to talk about the deal, his strategy to compete with giants like Airbnb, Expedia oder Booking.com in the online travel industry and the „niche factor“.
Trending Topics: 50 million dollars investment – that is a massive funding round. How did you raise so much money?
Travis Pittman: It actually stems back to our angel investor Erik Blachford. He was the first CEO of Expedia and is based in San Francisco. He has been an angel investor with us since three or four years now, since when Speedinvest came in as well. He is an venture partner in TCV, who have invested in us in this round. His involvement and his confidence in what we are doing, has impressed Silicon Valley investors which normally wouldn’t look at a startup in Austria. It also is the first investment for them in Austria. Without Erik on our side it would have been much more challenging to get such a C investment. It’s validation for that we have done a few things right, like our product-market-fit or like getting things to a scaling stage. That is what we did with our Series B last year. Now it’s about scaling up and in this growth phase you need cash. It’s about hiring the right people and investing into technology and marketing.
From your point of view, why is TourRadar valued so high? What’s your secret sauce to attract this big investors?
We found the right niche. It’s kind of the last frontier of the travel industry. Travel is something that everyone does and there is a lot of graveyard – a lot of startups die trying to succeed, because it is so competitive. If you look at where we are positioned, we just found the right spot. Multi day touring is something no one believed in and people asked us for a long time: „why are you doing this?“. My brother and I really believed in it and we saw the long term potential of it. You need to stick to that and don’t go outside – we could have gone to day tours or expand our plattform to tour guides or b2b experiences. At the end of the day, investors liked that laser focus and the area we wanted to stick with. It’s the focus and of course the execution. Without execution you don’t have anything. We for example stick to english to date. We don’t try to roll out to all new markets like Germany or Spain. That’s about to come, that’s the next growth stage. We have proven in one area and now we are going to roll out to new markets.
What are you going to do with that huge pile of money?
It is only a week ago, I told the team and it wasn’t until then it become a bit more real. It’s very important to not get too excited about it. It’s all about sticking to the plan we came up with. That is part of the deal – you have to have plans and forecasts. Having all the cash on the bank account just makes you think longer term. Many startups, including us to date, have to think short term, because you are surviving month to month. So the nice thing about a big investment is that it allows you to think bigger. That could be new markets or we might identify new technologies or teams, that really would accelerate our growth, that we could potentially acquire. It’s also about hiring world class people. Here in Austria it is challenging to hire people who have done a startup that grew up to high success. There are only a few companies who have managed that. Bringing in people who have seen this journey before is important. So we are looking in London or even in Asia or Silicon Valley, bringing in people, who really have done this before. This is what this round allows us.
Would you acquire another startup?
It is definitely something we could think about. The opportunity is right and we can look at it. It has to be the right technology and it has to fit into our roadmap. We don’t have an eye on someone at the moment. It has to accelerate our growth and we wouldn’t do it, if we could also hire organically. We have four recruiters and can hire fast.
You´ve got a long list of shareholders. Is the company still lead by the founders, are you still in the driver’s seat?
That is actually something I’m really excited about and really proud of. We have been given a lot of autonomy. Erik has joined the board now as part of the TCV deal, which is fantastic. Our board is fantastic and the board members from our VCs are very supportive and very solution focused. It is getting a very big business now – we have 130 people in three offices globally and that is only going to increase. Having those experienced people to holding our hand is very key.
Talking about big business. The online travel biz is a crowded space with big players. How can you compete with Expedia, Booking and the likes?
I think it comes back to the niche factor. Multi-day touring has not been focused on by any of those guys. If you look at Booking.com or Expedia, they have been battling on hotels and flights. If you look at other big names, like Viator that has been bought by TripAdvisor, or GetYouGuide, they are fighting it out for the day-tour stuff. They are all fighting for these niches we aren’t in at all. Obviously there are things around the edges that we get affected by. Airbnb is doing a great job with “Experiences”. That all can affect market share to some degree, but I feel we are playing in a space that has been traditionally owned by offline travel agents, and we are bringing that online. Even today 90 percent of tours that we sell are still sold offline, so there is a massive chance to migrate that online. A lot of the tour operators are recognizing that. The younger demographics are not really using these travel agents as much.
Tourradar is working with 600 partners worldwide. How does your business model work?
It´s very simple, it is commission-based. If we make a sale, we earn a commission. We tried a lot of business models along the way. We tried all sorts of things, like cost-per-click or cost-per-acquisition, that was very difficult to make it work. It is not very complex if you work it out. it is obviously important to have the biggest selection, we want to have something for everyone. We don´t just wanna be a youth brand or just offer adventures, we want to have everything for everyone. A marketplace is all about liquidity and having the right supply and demand, and if you bring in the right mix of both, things really start to work.
Who is your typical customer, and what is the most popular tour?
Our biggest demographic is 18 to 35 year olds. That has been shifting as we have brought some new products on board. The 50-plus-demographic is becoming a bigger part of the market. We pushed into the luxury market for example, things like river-cruising where a booking can be 20.000 dollars for one person or even higher. What has been selling really well are things like a week in Thailand or the city-hopping tour through Europe. It is important to note that the area we play in the travel industry is the fun, sexy and cool side of things. These are not just commodity products like flights, or hotels, but we are selling life-enriching experiences. People get things that they normally wouldn´t have done. We see a shift globally from material things to experiences, and that is also why we managed to get this investment.
You and your co-founder and brother Shawn are from Australia. What made you found a company in Austria?
14 years ago I moved to London, and during one of my trips, in Barcelona I ran into an Austrian girl. So I moved from London to Vienna. Here in austria there are plenty of opportunities for grants, and there is a lot of angel money for early-stage startups. While there are still challenges, there are really good benefits for early-stage companies. The network of Speedinvest really helped us to get where we are today.
Usually big VCs want their money back. What is your exit strategy? Would you consider to sell to a bigger company like Expedia or Booking?
I think any investor wants his money back, not just the big ones (laughs). An exit at some stage is what they want, and an exit can come in a number of different ways. That can be an acquisition, it could even be an IPO. I think the benefit with this fundraising round gives us flexibility. Previously it was more of an acquisition route, I think now we can just go and see what happens. Right now we are very focused on executing. I think it would make sense for one of the big companies to buy us, because the don´t have the multi-day-touring on their platforms, but the IPO side of things could also be a possibility. I´m not thinking of that too much now, it is more about having money in the bank and focusing on the product and the team.
Biggest investments in Austrian tech companies since 2015
|Tricentis (Software)||154 Mio. Euro||Insight Venture Partners||2017|
|Hookipa (BioTech)||50 Mio. Euro||HBM Partners, Hillhouse Capital, Sirona Capital, Gilead||2017|
|Tourradar (Travel)||43 Mio. Euro||TVC, Cherry Ventures, Endeit Capital, Speedinvest, Hoxton Ventures||2018|
|Arsanis Biosciences||40 Mio. Euro||Bill & Melinda Gates Foundation, Google Ventures, Alexandria Venture Investments, OrbiMed, Polaris Venture Partners, SV Health Investors, NeoMed, EMBL Ventures, Anna Maria and Stephen Kellen Foundation||2017|
|Emarsys (Marketing Automation)||29,3 Mio. Euro||Vector Capital||2015|
|Miracor (BioTech)||25 Mio. Euro||Ming Capital, SFPI, SRIW, Meusinvest, Earlybird Venture Capital, Delta Partners, SHS, Biomed Invest, Peppermint Venture Partners||2017|
|Bitmovin (Video)||24,4 Mio. Euro||Highland Europe, Atomico, Constantia New Business, Dawn Capital, YCombinator||2018|
|Emarsys (Marketing Automation)||20,3 Mio. Euro||TPG Specialty Lending Europe||2016|
|Usound (Hardware)||12 Mio. Euro||eQventure, Hermann Hauser||2017|
|> 10 Mio. Euro||2017|
|Themis Bioscience||10 Mio. Euro||GHIF, aws Gründerfonds, Wellington Partners, Omnes Capital, Ventech||2017|
|Crate (Big Data)||9,4 Mio. Euro||Zetta Ventures, Mike Chalfen, Deutsche Invest Equity, Speedinvest, Sunstone Capital, DFJ Esprit, Solomon Hykes||2018|
|9,2 Mio. Euro||Atomico, Chris Kaiser, Edward Cozel, David Helgason, Dawn Capital, Speedinvest, Constantia New Business||2016|
|Tourradar (Travel)||9 Mio. Euro||Endeit Capital, Cherry Ventures, Hoxton Ventures, aws Gründerfonds, Speedinvest||2017|
|Wikifolio (FinTech)||7 Mio. Euro||Postfinance, New Alpha||2017|
|7 Mio. Euro||Peppermint, Earlybird, Biomed Invest, AWS, Delta Partners SHS||2016|
|Robart (Robotics)||6,1 Mio. Euro||Robert Bosch Venture Capital, Innovacom, CM CIC Capital Innovation, SEB Alliance||2017|
|6 Mio. Euro||eQventure||2016|
|5,3 Mio. Euro||Cherry Ventures, Hoxton Ventures||2016|
|Eversports (Sports)||5 Mio. Euro||Enern, Market One Capital, Russmedia, Point Nine Capital, RTA Ventures, Gerbig Ventures||2018|
|5 Mio. Euro||Beringea, Ariel Luedi||2017|
|Smartbow (AgTech)||5 Mio. Euro||Zoetis||2017|
|4,2 Mio. Euro||iSeed, Roche, XL Health||2015|
|3,7 Mio. Euro||Speedinvest, Wargaming, North Base Media||2015|
|Crate (Big Data)||3,6 Mio. Euro||Sunstone Capital, DFJ Esprit, Speedinvest, Dawn Capital, Solomon Hykes||2016|
|cashpresso (Fintech)||3,5 Mio. Euro||Reimann Investors, Dieter von Holtzbrinck Ventures, Speedinvest, Hansi Hansmann, Runtastic founders||2018|
|Adverity (Marketing Data)||3,2 Mio. Euro||Mangrove Capital Partners, Speedinvest, 42cap, aws Gründerfonds||2018|
|Enpulsion (Satellites)||3 Mio. Euro||Alon Shklarek, aws Seed Financing, Horizon 2020||2017|
|whatchado (Video)||2,5 Mio. Euro||Nicole Ehrlich-Adám, Hilde Umdasch||2016|
|2,2 Mio. Euro||Point Nine, Gerbig Ventures, RTA und Marcin Kurek, AWS Double Equity||2017|
|Nuki (Smart Home)||2,2 Mio. Euro||Up To Eleven||2016|
|mything (3D Printing)||2,1 Mio. Euro||KaPa Ventures||2017|
Disclaimer: Speedinvest is an investor of Trending Topics.