Why we invested in Tripaneer
One of our latest marketplace investments at Point Nine Capital includes Amsterdam-based Tripaneer, a company that runs multiple different booking-sites for vacation themes such as Yoga Retreats, Surf Camps, Culinary Vacations or Martial Arts Training Camps.
In this post I’d like to share some insights on why we decided to back the awesome team building Tripaneer. For that matter, I’ll roughly follow the structure of our internal deal memo, that Savina recently open-sourced. I hope it will help other founders to better understand Point Nine’s way of thinking, the investment process and what we look for in a marketplace-business.
This is obviously just a high-level summary and will never do justice to the analytical, research and discussion effort put into our internal deal memo.
Life is about experiences. Vacations are about experiences, experiences are created through activities. As a traveler, how do you book activities?
Tripaneer is fundamentally changing how people approach the booking process of multi-day vacations and activities: Instead of choosing the destination first, you can book your vacations based on your preferred multi-day activity, or better, based on the experience you would like to live. From that perspective Tripaneer is reversing the approach of how people book vacations by offering a new way of planning and booking holidays.
The challenge is that the vast majority of activities are not yet available, let alone bookable online. On one side, Tripaneer allows activity providers to make their activities bookable on-demand online in an easy and comfortable way. On the other side, travelers can easily find, compare, book and pay experiences on the platform.
One might argue that the travel sector is not an “intuitive” investment target for an early stage VC like Point Nine. Is it still ripe for disruption? Hasn’t it experienced significant digitization already? Last but not least, due to large online pure-players like booking.com, Expedia, Skyscanner or Trivago the general belief is that this space is already very “digitized” and hence saturated. After all it’s the second most developed sector in terms of online penetration (in Europe) and supply availability .
However, taking a closer look at the travel industry one quickly notices that this might be the case for the hotel or the airline industry, but large “niches” are not yet properly addressed and still offer exciting opportunities for disruption.
Our conviction is that Tripaneer represents one of these by addressing the broader market of packaged tours and special interest tourism. To quote Dealroom.co’s 2016 Deep Dive on the online travel industry:
“Traditionally the domain of TUI, Thomas Cook etc, this $55B market is still is 75% offline ($41B). Much anticipation now comes from highly personalised travel solutions using human and artificial intelligence (…) and on-demand models.”
Keeping that in mind, Tripaneer is eventually disrupting the growing business of large incumbents such as TUI or Thomas Cook which are still to a large extent offline. On a side note, large hotel chains like Marriot apparently have similar thoughts and, of course, AirBnB is trying to get a piece of the pie, too.
Another way to assess the market potential is to take a closer look at the so-called “Wellness Tourism” industry. The (slightly outdated but publicly available) “Global Wellness Tourism Economy Report 2013 & 2014” states that the Wellness Tourism Economy was a $438.6 bn global market in 2014 out of which approx. $93.4 bn (21.3%) are spent on lodging and $61.4 bn (14%) are spent on activities. Both of these categories fall into the company’s current offering. Roughly one third (32%) of this market ($139 bn) is categorized as “international inbound wellness tourism” and 59% are labeled as “non-spa wellness tourism” which include activities, fitness, retreats etc. Hence, at least $29 bn ($139 bn x 35.3% x 59%) could fall into Tripaneer’s actual target market or “total addressable market”.
On top of that there is a plethora of adjacent fields that Tripaneer is already or will be addressing in the future:
Note: Those large numbers obviously include all sorts of spending related to tourism globally. Tripaneer will not be able to tap into all of these transactions everywhere. Assuming a similar distribution in terms of spending patterns as previously mentioned (14% activities, 21.3% lodging, 59% international inbound) this translates into a total global market potential of approx. $507 bn for Tripaneer’s target categories.
When I first met Rob and his team in Amsterdam I was impressed with the culture they managed to build: extremely open, transparent and inclusive. We went for lunch with the whole team and everyone was bombarding me with questions. That was a very refreshing experience, I could grasp the open-minded spirit and I quickly felt like being “part of the team”.
Likely due to internationally successful marketplaces such as Marktplaats (acquired by eBay), Booking.com (acquired by Priceline) or, more recently, Treatwell (acquired by Recruit) and Catawiki, the Netherlands seem to be a great breeding ground for marketplace startups and founders.
Tripaneer is a direct offspring of such history: The team has outstanding (entrepreneurial and corporate) experience in the travel industry and thus a superior understanding of the market. This combined with an extremely data-driven approach and great tech-talents are the perfect ingredients for a marketplace success story “made in the Netherlands”.
Tripaneer’s approach fits nicely into our SaaS-Enabled-Marketplace strategy: By giving activity providers and tour operators tools to manage their own business, the company acquires an inventory of unique supply and makes it available and bookable online. That way, it also contributes to a general switch from offline to online bookings. In doing so, they are cutting out the middlemen (traditional travel agents) and making the entire market more efficient, leaving more money to activity providers and their customers.
Both, the supply- as well as the demand-side, are highly fragmented internationally (e.g. “US-Americans booking a Yoga-retreat in Bali organized by a German on a Dutch platform”). But, Tripaneer is democratizing the market even further: Now, almost everyone could act as an activity provider, run his business and get demand over the platform. E.g. some of the yoga retreats offered on the platform are simply born out of regular yoga classes or groups where one person (usually the teacher) decided to organize the activity for groups via Tripaneer.
From that perspective, Tripaneer is even growing the overall market size by enabling people, who previously wouldn’t have been able to, to run a small business on top of their platform.
In a nutshell, Tripaneer’s unique selling proposition (USP) consists of the proprietary inventory they are creating and associated network effects:
Tripaneer has a simple transaction-based business model: Just as any other booking engine, it takes a cut (%-fee i.e. take rate) out of each booking which is charged to the activity providers only (i.e. the supply-side).
By enabling online payments for them and making their offering available online, Tripaneer gives them access to a global audience of potential customers and every booking can be tracked. Hence, the monetization is purely performance based: If Tripaneer does not deliver any booking there will be no cost associated with being listed on the platform or using the Tripaneer-backend.
As mentioned above, the largest (indirect) competitors of Tripaneer are traditional tour operators such as TUI, Thomas Cook or contiki. Some of their - presumably - biggest challenges are
A) The transition to the digital world, meaning a focus on online distribution (classic “innovator’s dilemma”).
B) The fact that they operate across the entire value chain e.g. they own a fleet of airplanes and manage their own retail travel agency chains which can be very costly. Because of that, Thomas Cook almost collapsed under a huge pile of debt a few years ago.
Note: I am deliberately excluding operators mostly focused on cruises such as Carnival, Disney or Steiner. It’s a different category that needs a dedicated solution which is being offered by new players such as German Dreamlines.
AirBnB recently unveiled its new product Airbnb Trips which includes single- and multi-day activities branded “AirBnB Experiences”. While AirBnB has the advantage of already owning the accommodation inventory, there are some regulatory constraints and challenges to its model. For regulatory reasons AirBnB is currently still bound to a “sharing economy” approach in many regions which means it cannot act as a tour operator. Under its current model, a traveler will not be able to book (in one single booking or transaction) an activity in combination with a proper vacation home or hotel-accommodation via AirBnB. Hence, the inventory is simply different and AirBnB Trips rather competes with players such as single-day activity marketplace GetYourGuide than with Tripaneer and his peers.
French Evaneos is a close competitor to Tripaneer but has chosen a different model to attack the market: Instead of cutting out the middleman or making a direct connection between the supply and demand sides, it partners with local (retail i.e. offline) partner agencies. This philosophy means a smaller piece of the pie for every stakeholder of the value chain (read: smaller take rate). It does not disrupt the market structure to the same degree as Tripaneer. Finally, it also means that Evaneos does not really own the supply as the company always has to work with the partner agency (so called “Destination Management Companies”) who manages - and always keeps - the direct relationship with the actual tour operator or activity provider. Hence, they need to share the commission and, in order to achieve the same absolute result as Tripaneer, increase prices to end-consumers which eventually results in a competitive disadvantage.
Another direct competitor is Austrian TourRadar. They mix single- and multi-day activities from large, traditional tour operators such as Contiki. Hence, TourRadar’s inventory is not unique and the company does not “own” the supply either (read: no unique supply). Therefore, its value proposition could rather be seen as a meta-search-engine for packaged tours (similar to what German HomeToGo would be to the vacation home market or Kayak to the Airplane ticket industry).
For the sake of completeness, let’s not forget about GetYourGuide. Its focus is still on single-day experiences and activities. That obviously does not mean that they couldn’t try to cover multi-day activities in the future but it would represent a significant shift in strategy and requires a different expertise and skill-set.
Note: While I’d like to be much more precise and to the point in this part, I also have to respect Tripaneer’s wish for confidentiality for strategic and competitive reasons. Hence, this paragraph will only include general take-aways from our internal analysis without disclosing any confidential KPIs or other insights.
What we were most impressed with is the exciting and consistent growth pattern of Tripaneer’s financial and non-financial KPIs - both, compared to a) other marketplace businesses we’ve seen in the past and; b) the (small) level of funding the company had raised previously.
In fact, the team had achieved very impressive revenue growth with a bootstrapping-approach that would be “on par” with any other high performing early stage funded marketplace business. All of that while maintaining extremely healthy and attractive unit economics in scalable marketing channels.
The team could clearly demonstrate that they have understood how to acquire customers at scale in a healthy way and grow the business steadily. We also identified a compelling potential for mid- and long-tail SEO due to the “uniqueness” of the supply (inventory).
✔ Problem: Tripaneer is a real problem solver and not just a “vitamin”. It makes offline supply available and bookable online and creates unique inventory.
✔ Market: A huge, highly fragmented market on both sides, supply and demand, that allows Tripaneer to grow to 10's - if not - 100's of millions of EUR in revenue.
✔ Team: Complimentary team with significant industry and entrepreneurial experience as well as passion for the product and market
✔ Product: SaaS-Enabled-Marketplace with significant potential for network effects
✔ Business Model: Proven business model with potential to further improve monetization going forward
✔ Competition: Existence of other players validates attractiveness of the market no other player has chosen the same approach / business model
✔ Traction: Very promising performance with limited resources and attractive unit economics
I hope this short summary proves helpful to some other (marketplace) entrepreneurs out there on their quest to raise early stage funding for their startup.
A big “Thank You” goes to Arthur and Marcel and, in particular, the existing founding angels, Ilse and Jasper, for sharing this amazing investment opportunity with us and inviting us to the deal. Last but not least, many thanks to Rob and the entire Tripaneer-team for your trust and sharing this exciting experience with us. As a famous person once said “Life is about creating and living experiences that are worth sharing.”