Travel startups: What's the ten-year investment, growth and failure picture?
Over the last decade, social networking and user-generated content-focused businesses have a failure level just under 60% while air-related new companies have the lowest failure rate at 20%.
The number of new travel startups being founded is slowing in the last few years, coinciding with a significant increase in the amount of investment flowing into maturing businesses.
In contrast, almost 900 new business were created between during 2012 to 2014.
The massive skew towards acquisitions and funding rather than founding has meant that 87% ($73 billion) of the total amount being invested in the market has come since 2015.
Until 2011, the majority of that slice of the overall funding had gone to companies based in North America, with European businesses a close second.
Since 2012, however, Asia Pacific-based travel startups started to surge onto the scene and have accounted for the most money ever since.
The much-talked-about tours and activities wing of the industry still lags behind air-focused services for the number of new businesses and is in third place after air and packaging startups in terms of the amount raised since 2008.
The ugly truth
Perhaps unsurprising to the market and keen watchers of startup activity over the last decade is the failure rate of social networking and user-generated content-focused businesses, which have a failure level just under 60%, followed by deals sites, rich media/video services, and inspiration-, content- and itinerary-related businesses which fail at around 40%.
These brands are essentially at the top of the consumer funnel, Coletta says, meaning they are further from the transaction and therefore find it harder to survive.
Air-related new companies have the lowest failure rate at 20%.
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