Headout travel experiences app survives Omicron surge, lands $30M in additional funding – TechCrunch
Although the COVID-19 pandemic almost immediately devastated the travel booking startup business On your mind, the company was able to return to growth as domestic travel rebounded in recent months. The service, which helps consumers book tours, events and other experiences and activities in cities around the world, has seen 800% growth since January 2021 by catering to domestic travel and local demand, for opposition internationally. In July, the startup became profitable EBITDA. And last fall, it closed with $12 million in Series B funding. Now its existing investors have returned to add more capital to the latest headout round.
Headout’s new $30 million seed round was led by former investor Glade Brook Capital, a company that has backed other marketplaces like Airbnb, Uber and Instacart. He is joined by existing investors Nexus Venture Partners, FJ Labs and 500 Startups, among others.
“We weren’t actively lifting,” notes Headout co-founder and CEO Varun Khona. “Glade Brook, an investor since September, saw the continued growth we’ve had and wanted to double our investment,” he explains. As a result, Headout also received some additional incoming requests and decided to close the additional funds. “The terms that were offered and the alignment that we had with them on the long-term vision was so good that it was just very hard to say no,” added Khona.
The company, at this point, has survived challenges that could have otherwise ruined its business.
As Khona said at the time of the initial Series B close, “Headout business went from over $250 million to negligible scale in a matter of weeks,” at the start of the pandemic. But instead of closing up shop, the startup has pivoted to focus more on domestic travel, catering to people looking to explore their own cities or those nearby. Today, domestic travel accounts for almost 80% of its business, a shift from the pre-pandemic era.
And now Headout has also successfully navigated Omicron’s surge.
By November 2021, the company had grown about 10x from the start of the year, Khona told TechCrunch. But this growth slowed in December and January with the release of Omicron. Over the past few weeks, however, Headout activity has increased further as the latest COVID variant has begun to peak.
Counterintuitively, perhaps, the pandemic is no longer completely suppressing demand for travel experiences, notes the founder. Sometimes it even inspires her.
“People are sitting on extra money – and they can’t travel abroad – but the desire to travel, see things and do things is higher than it’s ever been. “, says Khona. “In fact, in some ways we’re noticing that consumers’ sentiment or desire to want to spend money and time or experiences is even higher post-COVID,” he shares. “We are now a little more aware of the limits of what life might be like if the things we love were taken away from us, both in terms of time and access.”
Headout won’t detail its monthly active users, revenue rate, or valuation — it’s just “several hundred million,” Khona says. However, the company will disclose that, so far, 10 million people from over 190 countries have booked an experience on its platform.
Today, Headout’s marketplace offers travel experience bookings in 50 cities around the world. It generates revenue by working directly with local service providers to digitize their offerings and provide support for last-minute bookings, with dynamic pricing. Headout takes a commission from bookings and is looking into the idea of a subscription, which it is currently piloting.
Its customers are usually young couples or families, as the average booking size is two to three people. They also tend to be city dwellers, quite educated and love to travel, of course.
With the additional funds, the startup aims to rapidly expand its business. It plans to expand its service to 500 cities over the next 24 months. And in the short term, Headout will grow its team of 150 people by an additional 200-250 over the next couple of months hiring in all roles.
Khona also sees an opportunity to grow the team through acquisitions, noting that there were plenty of travel and entertainment startups that lacked the capital to survive the pandemic, but have plenty of great talent.
“We are very keen to look into this and we are already in conversation,” he suggests.
On the product side, Headout will use some of the capital to improve the experience for both its partners and consumers. For the former, he’s working on better ways to offer last-minute inventory and tools that would allow a tour to showcase the guide’s live current location for those who wanted to join late, for example. And for Headout users, the company is working on discovery improvements that it isn’t ready to detail yet.
Despite the expected growth in the coming months, Khona does not expect to lose much of the new capital.
“Each additional trade actually improves our bottom line because each trade on Headout is profitable. An increase in scale equals an increase in our bottom line and profit,” he says. “We are not too worried about the burn in itself.”
Update, 2/2/22, 4:50 PM ET: Updated quote from approximately $250 million at negligible scale during COVID to an exact quote from a previous report.