Travel innovation scrutinized by McKinsey analysts.

Underfunded Travel Startups Compared to Other Sectors

The travel startup industry has historically received significantly less funding than startups in other sectors. A recent report from Phocuswright and McKinsey reveals that, over the past 15 years, the travel and tourism industry only received around 1% of funding for startups across all industries, even though it contributed more than 10% of global GDP in 2019. Despite this, there have been some travel startups that have managed to attract substantial investments, even amid the pandemic.

Outlook for Startup Funding in Travel Industry

The recent collapse of Silicon Valley Bank and issues at other financial institutions have raised new questions about the outlook for startup funding in the travel industry. To shed light on the opportunities for travel startups and what investors are looking for, McKinsey partner Nina Wittkamp and associate partner Evgeni Kochman shared data from the recent report and outlined the five themes shaping trends in travel startup funding.

Five Themes Shaping Trends in Travel Startup Funding

According to McKinsey’s report, there are five main themes shaping trends in travel startup funding. These include:

• Shift from supply-driven to demand-driven innovations: Investors are now more interested in consumer-centric solutions that solve actual problems faced by travelers.
• Focus on enhancing the customer experience: Travel startups that can enhance the customer experience through innovative technology are more likely to gain funding.
• Rise of mobile-first solutions: Travel startups that prioritize mobile solutions are more likely to attract funding, as mobile has become the primary platform for travel bookings.
• Importance of sustainability: More investors are looking for travel startups that prioritize sustainability and eco-friendliness.
• Shift towards B2B2C models: Investors are now more interested in travel startups that offer business-to-business-to-consumer (B2B2C) solutions, as they provide more opportunities for scalability and revenue generation.

The Full Discussion

For a more detailed discussion about travel startup funding and the opportunities available, check out the full discussion between Nina Wittkamp and Evgeni Kochman in the video below (recorded prior to the collapse of Silicon Valley Bank).

Read the Full Report

If you’re interested in learning more about travel startup funding and the latest trends, be sure to read the full report from McKinsey and Phocuswright, “Travel startups: Disruption from within – or not?”

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