Airbnb’s valuation soared to new heights upon its debut in public markets, even as the pandemic kept revenues low.
Now another unicorn startup focusing on the travel space is also getting a revival: TripActions, a maker of corporate travel and expense software, announced it had raised $ 155 million in funding on Thursday, pushing its valuation up from $ 4 billion to $ 5 billion in 2019 even though revenues remain below pre-pandemic levels. The Series E round was led by Andreessen Horowitz, Lee Fixel’s Addition Ventures, and investor Elad Gil. Zeev Ventures, Lightspeed Venture Partners, and Greenoaks capital also participated.
It’s an uprising that was hard to imagine at the start of the pandemic. Multiple startups in the space have taken action to cut costs, and TripActions has laid off a quarter of its 1,100 employees as bookings and usage among its customers dropped by 90%.
But now the vaccine has shown investors a light at the end of the tunnel, creating a time frame to buy in travel startups, while believing companies in the space are undervalued.
That’s part of the thought that led Gil, a longtime Airbnb investor, to co-lead the round. The investor pointed out Warren Buffett’s famous quote, “ Fear when others fear, ” adding that he believes travel is likely to recover by 2022, if not the end of 2021.
By focusing on acquiring major customers and launching new features, including one that broadly analyzes operating costs and another that allows customers to monitor virus numbers in travel regions, TripActions has convinced its investors that it can be a winner after the pandemic, even if the revenue was only 60% in the year ended January 2021 compared to the days before the virus. And while revenues fell, the total “book of business,” a number that actually represents total transactions through TripActions, grew from $ 2.1 billion to $ 3.6 billion over the same period. (“TripActions also performed extremely well in its tight times. When I think of travel, the two companies that stood out were Airbnb and TripActions,” says Gil.)
For TripActions, its future business is not just about overcoming the pandemic. The company is also betting that business travel trends will fundamentally change, even in the most optimistic of scenarios. Anticipating that the trend of remote working will continue even with the virus eliminated, Ariel Cohen, TripActions CEO, says the company expects more group travel as diaspora staff meet quarterly or weekly.
“By working from home and a more distributed workforce, [we believe there could be] more team meetings, ”says Cohen. “We think there will be a bigger change around business travel.”
Previously, TripActions focused more on medium-sized businesses, but in 2020 TripActions closed deals with Netflix, GameStop and Rivian. I couldn’t help but ask, was TripActions targeting customers who it believed would travel quickly, even during the pandemic?
To an extent, yes, Cohen says. But it’s more aimed at companies that it thinks will travel in the long run. Take the electric car manufacturer Rivian for example: “When you develop a car, you have to travel – that was our assumption.”