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The State of Travel Startups.
By Douglas Quinby
Friday, 29th August 2014
 
At PhoCusWright, we get a lot of briefings from travel startups and over the years, we have seen many emerging companies, so we decided to dig into the numbers to see what we could learn about the state of startups in travel – where are entrepreneurs investing their creative capital, and where are investors placing their bets?.
 
Travel Startups  – Companies & Dollars

First, we set a few parameters: companies had to be founded between 2005 and 2013 and they had to be focused on travel and digital. And they had to be real. We had to see a real product or at least have some credible and verifiable backing. In other words, there had to be a little more than a couple of developers in a garage or a fancy pitch deck.
 
We ended up including almost 750 travel startups. Combined, those companies raised approximately US$4.8 billion over the eight-year period. That includes angel, venture and later-stage investments as well as strategic acquisitions. We excluded IPOs.
 
Has the market been pretty hot? Well, the majority of that funding happened in just the last three years – more than $3.3 billion. This was led by some bigger deals with companies like trivago, Airbnb, Lyft, Uber and China's Qunar, eHi Car Rental and Kuaidadi (it excludes the monster rounds raised by Airbnb and Uber in 2014).
 
You could argue that ride-sharing and taxi-hailing services such as Kuaidadi, Lyft and Uber are not so much in travel as they are in local transportation. If we exclude them, a majority of the total funding would still have occurred within the last three years.
 
Asia's Spectacular Growth

One of the most exciting developments is the growth in startups coming from outside the U.S. and Europe. From 2011 to 2013, 30% of travel startups were founded in emerging market regions. Asia  –  led by China  –  is driving most of that growth.

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