Travel is back on the radar for investment, with consumers and business users both on the move again after a long pandemic period of staying in one place. Today, a startup called WeTravel — which builds tech for the specific needs of group travel — has raised $27 million, money that it will be using to expand its business on the heels of strong growth in the last year.
The company provides payments and other tools to some 3,000 companies, working out to 500,000 customers using its platform. Transaction volumes have grown 30% and revenues currently sitting at 3x the level it was pre-COVID. CEO and co-founder Johannes Koeppel said he believes those figures will double again in 2023 “as a conservative estimate.”
The Series B is being led by Left Lane Capital, with previous backers Swift Ventures and Base10 also participating alongside angel investors that include Victor Jacobsson, one of the co-founders of Klarna.
WeTravel had previously raised only $7 million in the eight years since it was founded. We understand from sources that this Series B was made at a valuation of a little over $100 million.
The startup, fittingly, has done a little traveling of its own. Originally, Keoppel and his two co-founders Garib Mehdiyev (CTO) and Zaky Prabowo (CMO) had moved out from The Netherlands to the Bay Area to start the business, only to find it impossible to navigate the visa waters to bring engineers and other technical talent over, too. So in 2019, WeTravel’s three founders relocated back across the pond to The Netherlands. COVID put paid to the idea that a startup needs to have its team in one place, and today, the majority of the company’s business team and customers are in the U.S., and it’s incorporated there, while the three founders, as well as WeTravel’s product and engineering teams, are all in Amsterdam.
The gap in the market WeTravel is going after is one that seems to have been created, ironically, with the growth of online travel services.
In the old, pre-internet days, travel agents ruled the roost when it came to booking tickets and overall vacations for many consumers and businesses, both as individuals and groups. Online tools have changed the game for individuals, but interestingly the same doesn’t apply to groups that want to, say, book a multiday trip or retreat that might involve several hotels, activities and food, which can involve multiple people, multiple locations, potentially hundreds of suppliers (not just hotels and airlines, but restaurants, excursion operators, insurance providers and much more), and the need for flexible paying options — different people paying different amounts, payments in installments and lump sum payments that in turn need to be itemized across different suppliers.
“The important piece is not so much about paying but what happens afterward,” Keoppel said, “what the travel company has to do with these funds. A typical trip might cost $10 to the user, with the vast majority of that going to suppliers. It becomes about fund management. And more involved the trip, the larger the amount of suppliers from restaurants and transport companies to airlines and hotels and more.” On top of that there are wire fees and different payment methods business to business, country to country.
WeTravel’s platform covers two main parts of that process: helping those putting the group travel together to organize suppliers and plan everything; and then handling the different aspects of the payment process, whether that involves setting up payments in installments, or working with various currencies and payment methods, and paying out to different suppliers under their individual terms.
Keoppel describes the fintech side of the business as “the PayPal for travel” and says that it’s complex enough that companies like PayPal, Stripe and other big names in online payments haven’t really been able to address the particular segment of the market that WeTravel is serving, especially when used in tandem with the first part of its product set to coordinate itineraries and suppliers.
Keoppel believes this is a template we might be seeing more in the B2B fintech world. “My belief is that there will be in the next couple of years more specific SaaS platforms that integrate payments as component for specific industries,” he said. (Indeed, today you already have some addressing this for, say, beauty and wellness, with companies like Fresha, Boulevard and Style Seat building tools specifically for the needs of that vertical.)
This is also something that WeTravel’s customers also have sometimes tried but failed to build themselves. As travel agents have become “travel advisers” and focus on these bespoke travel experiences, some have turned, he said, to “custom-made systems they build themselves, but what I’ve realized is that what is lacking is the end customer experience. They don’t have the time to build the beautiful invoicing system plus payment methods, and all of the rest.”
One thing that WeTravel does not currently do is offer discovery to its users — that is, travel advisers might still turn to their little black books, or these days maybe TripAdvisor, Yelp or other recommendation and discovery platforms, to find interesting restaurants and more. This is something that WeTravel could potentially move into as it grows.
`One significant elephant in the room is what happens when other big travel platforms consider how they might do more in this area: They already have all the big supplier relationships and it might be a matter of building or buying tools to meet this use case.
Vinny Pujji, who led the investment for Left Lane, recalled that his parents once ran a travel agency, “so this was a cool one for me to see,” he said. “You bump into sneaky big markets and this is absolutely one of them.”
He noted that the COVID winter that descended on travel does appear to be thawing, even in the current economic climate.
“The data tells us that travel is mostly back now,” he said. He points out though that the company has grown 3x since 2019, underscoring that WeTravel in particular might have proven the axiom if a startup can make it through the pandemic, it can make it full stop. “Church groups, students, there are more stable revenue streams here than just destination bachelor parties.”