A new era for travel startup investing

This is preview of Phocuswright's The State of Travel Startups 2024

By Mike Coletta

Phocuswright has tracked and analyzed the digital travel startup landscape for over 15 years, and as of November 2024 there were nearly 8,000 companies in our Travel Startups Interactive Database (available to Phocuswright research subscribers or for a la carte purchase). All the data presented in this report, and much more, is accessible in the online database.

Travel startups have weathered a drastic funding downturn over the past 2+ years, but recovery is on the horizon. All signs point to a rebooting of the venture capital cycle. Yet the future may look nothing like the past. Generative artificial intelligence (GenAI) and its progeny, particularly autonomous agents, are primed to revolutionize the entire travel booking funnel as well as transform how startups and investors operate.

Leveraging data from Phocuswright’s proprietary startups database, this report presents a comprehensive assessment and outlook for travel startups in today’s challenging funding environment.

5 Key Takeaways

Funding to travel startups dropped to nearly a 10-year low in 2023, coming in at $5.2 billion. Through the third quarter of 2024 (3Q24), funding rests at $4.3 billion, putting it roughly on track to be on par with 2023.
2023 marks by far the lowest activity on record when it comes to funding rounds completed..
The next era of travel startup investment may look nothing like the last. Generative AI is expected to transform the travel industry as well as how companies operate, potentially shifting industry dynamics and reducing the need for funding in the long term.
Funding to B2B-oriented companies in 2024 has overtaken B2C for the first time, reaching 51% of total funding as of 3Q24. This shift may be partly driven by clear use cases of generative AI in B2B areas like customer service, workflow automation and data analytics.
Europe leads in regional funding share in 2024, driven by growth in mobility and corporate travel sectors, while the U.S. maintains a dominant position at the country level.

The full report includes data and in-depth analysis of the current state of travel startups and investing, including:

The state of funding

Funding rounds and average funding size
Number of acquisitions per year

Reboot of the investment cycle

Cycle reset
Historically active travel VCs

Regional breakdown

Share of funding by region, country

B2B benefits

Share of funding by business focus, B2B vs. B2C

Average time for acquisition or exit

And much more

Methodology

This report strikes a balance between analyzing funding to startups and examining recent funding raised by important players in travel tech regardless of their age. Thus, it features analysis of technology-oriented travel companies founded any time in the past three decades, and it measures funding raised by these companies over the past decade – specifically between the beginning of 2014 and the third quarter of 2024 (3Q24).

Changes to the data and methodology:
*In mid-2024, Phocuswright enhanced its data collection processes and added thousands of companies to the database that were not included previously. This nearly doubled the number of companies in this analysis compared to previous reports. This annual report has historically been titled The State of Travel Startups and analyzed startups founded within a certain date range (e.g., the past five or 10 years). In 2023, given that well-established companies were among the main entities raising money, we expanded the range to include companies founded at any time in the past three decades, and titled the report as The State of Travel Funding. This year, we switched the emphasis back to startups, but retained the expanded founded date range.

To avoid skewing the analysis, companies that have raised over $4 billion or only operate tangentially in travel (specifically, autonomous vehicle companies) were excluded from the analyzed dataset unless otherwise specified. As a result, 35 companies (e.g., Uber, Didi, Airbnb, Cruise, Waymo), which have raised $117.3 billion, are excluded.

**Funding includes publicly disclosed amounts of venture capital, private equity, crowdfunding, debt and other types of traditional funding rounds. Dollar amounts associated with IPOs, acquisitions, mergers and post-IPO investments were excluded from the analyzed dataset.

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