Research Insights 6 key trends about funding and the state of startups in 2020

6 key trends about funding and the state of startups in 2020

December 2020
Phocuswright Research

The COVID-19 pandemic is significantly suppressing funding to travel startups in 2020, but not all regions or segments are being affected equally. According to the latest Phocuswright travel research report The State of Travel Startups, funding to B2B-oriented startups through 1H20 is on pace to eclipse B2C funding for the first time on record. This is in line with the market dynamics of B2C startups feeling the squeeze with limited travel.

Phocuswright Chart: B2C vs B2B Funding
(Click image to view a larger version.)

To better understand the startup pulse and outlook of entrepreneurs, Phocuswright fielded an online survey to travel startups in July 2020. This was complemented by in-depth interviews with founders and investors, along with data from our The State of Travel Startups Interactive Database.

Now nearing the end of 2020, the state of the travel industry and startups still looks grim. The prolonged economic shutdown continues to batter the travel industry as waves of COVID-19 rise and fall across the globe. Small businesses are up in arms that government support has largely been insufficient. Still, there are glimpses of hope and resilience all around us.

Here are 6 key trends from the report:

  1. 2020 is on track for the lowest number of funding rounds since 2013
  2. Early-stage suffering, late stage gaining, exacerbating long-term trend
  3. First-time funding rounds are concentrating into later-stage companies, which investors deem as less risky in the current environment.
  4. North America holding strong; APAC down significantly
  5. Acquisitions picking up
  6. Vertical and horizontal funding shifts for recently-founded startups

Phocuswright has tracked the digital travel startup landscape for well over a decade, and innovation in the travel industry has flourished during this period. But when the COVID-19 pandemic hit in early 2020, most growth plans were put on hold, and the future of many travel startups was brought into question.

Leveraging Phocuswright's proprietary interactive database, in-depth interviews and an online survey of global travel entrepreneurs, this updated report provides a comprehensive assessment and outlook for travel startups in today's challenging environment. Specific topics include:

  • Analysis by year, type, region and category
  • Funding activity by stage
  • The market trends driving investment
  • B2B vs. B2C funding

AGet the entire report here and The State of Travel Startups Interactive Database here. If you're looking to unlock the entire Phocuswright research library, subscribe to Open Access. Plus, you'll be able to give access to your entire company with your subscription. Find more information and the benefits of being a research subscriber here.