TravelPerk Welcomes SoftBank as a New Investor
In January 2024, TravelPerk announced a USD 104m equity funding round led by new investor SoftBank. Kinnevik is excited to double down on our investment, having made an anchor investment in Q2 2023 as part of this round.
It has been over 5 years since we first backed Avi and the TravelPerk family, leading their Series C round back in 2018. Since then, we have seen TravelPerk deliver on their ambitious plan, irrespective on an ever-changing external environment.
At Kinnevik, we like to focus on huge markets where we see potential for disruption such as the Corporate Travel industry. It is currently sized at USD 1.1tn – at par with leisure travel – and is expected to grow over 6% CAGR over the next decade as companies look to build and maintain culture and human connections in a remote-first world. From an investment perspective, corporate travel offers significantly better marketing efficiency than leisure travel. Companies are acquired once and see a high share of employee usage within the “walled garden”, rather than relying on Google and re-acquisition costs.
Still, the pace of innovation and user experience in the corporate travel sector has far lagged its leisure equivalent. Existing solutions have failed to incorporate many of the features considered basic on the leisure side such as real-time pricing, universal inventory, or intuitive user interfaces. For CFOs, the lack of transparency and control over what is often the second largest controllable cost (after payroll) is unacceptable. And for corporate travellers, outdated technology paired with non-responsive customer service and complex reimbursement processes lead to unnecessary frustration.
As a result, the share of corporate travel spend “managed” by a travel company has remained constant around 30%. However, in the last few years, the industry has begun to see a secular shift from unmanaged to managed travel spend as newer solutions emerge that respond to companies’ demand for i) greater visibility over spend and enforcement of policies; ii) real-time customer support to cope with the rise in travel disruptions; iii) heightened focus on emissions reporting, and iv) duty of care to map employee locations in a world with heightened geopolitical and health risks.
As a result, it is no surprise that over 65% of TravelPerk’s new clients were previously unmanaged – showing that the company is perfectly poised to benefit from the ongoing secular shift.
TravelPerk has also built a best-in-class product and engineering organisation that has continuously launched value-add services that responded to clients’ needs – including FlexiPerk, the world’s first flexible cancellation policy or GreenPerk, a carbon-offset product. Lately, the team has been focused on automation and building a scalable architecture by leveraging AI in customer support. Throughout, the company has developed deep integrations with other software solutions in the Office of the CFO in order to achieve full employee-spend visibility, including with Pleo (another Kinnevik family company!).
These product improvements have allowed TravelPerk to scale rapidly – it is approaching annualized booking volumes of USD 2bn, having grown its revenues over 70% in 2023 and gross profit over 90% in the same period. More importantly, it has surpassed all the ambitious five-year milestones (GMV, take rate, gross margin, etc) that we underwrote in our first investment (back in 2018!) and resulting in a ~4x return for Kinnevik.
However, what truly sets TravelPerk apart is its best-in-class team. Avi’s leadership has set the tone for a strong and authentic company culture, and we believe this is the “secret sauce” of the company.
Fit Within Kinnevik
At Kinnevik, we are strong believers in businesses driving the corporate adoption of consumer-like solutions for the business use. The “Consumerization of Enterprise”. We look for huge corporate markets with obvious gaps in product standards and self-serve dynamics that result in employees driving adoption, resulting in hypergrowth companies. As you can see, TravelPerk fits squarely in this description.
Since 2018, we have been proud to support TravelPerk on their mission to redefine the corporate travel sector. We are incredibly grateful to Avi and the team of over 1,200 employees for allowing us to be part of this incredible journey. We could not be more excited for what the future holds for the business!