What is a Startup Club? Disruption in the Travel Industry.

If you watched the frenzied consolidation in the travel, tourism, and hospitality industry over the last decade, you wouldn’t find much incentive for legacy travel companies to work with newcomer startups.

There are three barriers to entry which startup founders encounter that are uniquely difficult in this industry.

  1. Starting up in travel requires significant upfront costs to build the basic connectivity before starting to build the USP or product.

  2. Ventures in travel require existing relationships with suppliers and technology providers which are extremely difficult for most startups to get.

  3. The industry is plagued by higher-than-normal-risk investments with smaller margins, making it difficult for startups looking to enter the space to secure funding.

Given these, it made sense that the biggest support came directly from larger corporations — the ones who hold the inventory — in the form of corporate venture capital models. However, this resulted in founders giving up their technology in exchange for access to said inventory. If I was a startup founder in travel 5 years ago, I didn’t have much of a choice but to be acquired.

Things are starting to change.

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As the VC landscape has warmed up in the past few years, with $51.1 billion raised in 2016 alone, people have started to pay attention to travel as the next testbed for disruption. While the trope that investors hate travel persists to this day, the truth is the landscape is nowhere near that bleak. There are plenty of investors who “don’t hate travel”, and organizations such as Travel Tech Lab and Plug and Play are taking note.

These companies all belong to that crop of innovation vehicles known as accelerators. For those unfamiliar with the accelerator model, in Harvard Business Review’s What Startup Accelerators Really Do, Ian Hathaway explains,

“Accelerators support early-stage, growth-driven companies through education, mentorship, and financing. Startups enter accelerators for a fixed-period of time, and as part of a cohort of companies. The accelerator experience is a process of intense, rapid, and immersive education aimed at accelerating the life cycle of young innovative companies, compressing years’ worth of learning-by-doing into just a few months.”

The particular idiosyncrasies of the travel industry, however, have posed a challenge to the success of this much-acclaimed model. Specifically, the fragmentation of inventory and reliance on relatively old distribution technology pose high barriers to entry for startups, notwithstanding substantial education, supportive long-term mentorship, and significant financing.

Even Amir Amidi, Managing Partner at Plug and Play Tech Center, was quoted by Skift’s Sean O’Neill in Travel Tech Startup Accelerators Learn From Early Missteps and Adjust Course,

“Larger [travel] corporations have not been incentivized to work with newer players. They get away with not being innovative. So we’ve had to be much more patient about helping good startups gain traction.”

Our opinion at Voyager HQ is that the ‘new crop’ of successful startup launch vehicles will not be accelerators at all, but rather a new model altogether. We refer to it as a club. Voyager HQ’s perspective is that accelerators are expensive, often more theater than substance, and have a low likelihood of success for companies that are not ready for them. We look to bring companies together on a curated level.

To be clear, accelerators can be great! We have steered many of our members to programs at the right time and place. Our hypothesis just holds that the travel industry is needing something more free standing. The club model allows all players, big and small, new or established, to work together on solving the industry’s most pressing issues. There is no timeline requirement associated with membership, as would be the case for an accelerator; rather, our club is open to entrepreneurs, free of equity, for as long as they are actively working in the travel industry. As a part of our club, founders get access to the shared knowledge, resources and connections that the community brings together, while our à la carte programming provides them with a customizable framework to get their ventures to the next level.

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From the perspective of a larger company, we also work with our partners directly to identify specific challenges and pain points in their businesses so that we are able to provide curated introductions to the startups in our network that are developing the innovative solutions they need.

A startup club, as we have formed it, provides an accessible environment where startup founders sit right next to other founders, enterprise partners and investors creating a collegial environment that allows for open interaction with potential stakeholders. Travel in particular doesn’t need to accelerate, it needs to collaborate.

Disruption is an inevitable truth in any industry. When the all the right players come together to collaborate on an even playing field, this accelerates disruption in a useful and meaningful way. That is why Voyager HQ was created, and that is our mission.