Make Tough Capital Decisions Now
This post firmly offers advice to travel startups and companies starting to raise capital, have partially raised a round, or any travel startup that needs more capital & revenue.
Remember that my viewpoint refers to capital raising and funding, not the overall travel market, which will likely be strong through Q4 2022, as I addressed in an earlier post.
Capital Is Scarce
For all but the most successful travel startups, capital raises are not an option for all intents and purposes (broadly speaking, for angel investors and VCs in general). The small % of overall travel startups I am considering Series A or B funding have much lower valuations and additional funding based on reaching milestones and a decidedly cautious approach to the investment.
For example, a red flag (shaky product market fit, for example) I would better accommodate or work with the travel startup to collaboratively overcome is now a reason to avoid investing. Skittish is the word I use to describe VC mindsets.
Even travel startups that have recently closed a fundraise tend to be the larger, more visible ones and, generally speaking, are doing so with stricter deal terms and at much lower valuation ranges.
Close The Round Now
If you are in the middle of a raise or on the tail end of a raise with some capital committed and other capital at good (but not excellent terms), I, personally, would close out the round as soon as possible and bank the capital and extend your runway past the next 18-24 months. These aren’t times to be picky, be especially difficult to deal with, posture for a higher valuation, or push your luck in general. My advice applies to travel startups in regions like Africa or select SE Asian nations where VC funding continues without the sharp slowdown experienced by their N American and European counterparts.
General Caveat
There are too many travel startups in too many countries, selling too many travel products at wildly divergent growth arcs, to give universal one size fits all advice. My advice applies to 8 out of 10 rather than every travel startup. For example, when I say funding is scarce, I am referring to most travel startups (of course, there are travel startups and travel companies that will successfully raise capital in the next 18 months).