Despite the continued pause of most corporate travel, TripActions has closed a Series E growth funding round of $155 million, bringing its valuation to $5 billion. This is the company's second major fundraise since the start of the pandemic - in June it raised $125 million in debt financing convertible at IPO.

Co-founder and CEO Ariel Cohen says the investment, led by existing investor Andreessen Horowitz, Addition Ventures and investor Elad Gil and with participation from existing investors Zeev Ventures, Lightspeed Venture Partners and Greenoaks Capital, is a sign of confidence in the innovations the company is bringing to market for both travel and expense management.

In February 2020 the company launched TripActions Liquid, a business spend management solution, and in September it unveiled TripActions Enterprise Edition, a unified travel and expense solution to serve global companies. The company says those are just two of more than 40 product enhancements and new capabilities launched since March.

Cohen says he was not seeking a funding round, but growth investors came to him toward the end of 2020 due to the company’s “execution in terms of taking market share.”

“We grew 75% this year during COVID. And the other thing is the Liquid product line ... is growing at a crazy rate. We grew last month 150% month-over-month,” he says. Current TripActions clients include Netflix, Wayfair, Accor and Lennar.

Now the company is focused on continuing to develop Liquid – Cohen’s vision is that in a few years, end-to-end automation will erase the concept of “expense management” – and creating a solution to address the new types of business travel arising due to COVID-19.

“We think that the world will have a lot more distributed workforce ... [which] means a lot of offsites ... and people will need to meet in a lot of different places around the world... [But] group booking is a really antiquated process in the industry – every step of it is antiquated,” Cohen says.

“So you’ll see us coming out with a solution where you’ll search right in our platform, 'Where should I do an offsite?', and it will recommend, based on the people that will participate in the offsite, where is the best place to do it from a cost perspective, complexity perspective.”

Consolidation

Along with those product developments, Cohen says he has been looking for companies to acquire but has yet to find a good fit.

“We’ve been looking at traditional TMCs, we’ve been looking at technology companies – and eventually it comes down to, do you think that if you do it with your team you’ll be more effective or not? Up until now we thought that we are more effective. We have a really good R&D team, and we have really good product team. That’s why you didn’t see us buying,” he says.

“And there is another thing. When we are looking at TMCs, more of the traditional TMCs, and the economics there, it kind of doesn’t make sense. ... You see the cost to sell and the margins and so on. If you look at our business model, it didn’t make sense to do these acquisitions.”

Since TripActions came on the scene in 2015, along with TravelPerk that same year and TravelBank the following year, the TMC space generally has been categorized as having a mix of startups and traditional companies. Cohen describes it less in terms of the age of the company and more about the way they operate – “old model” versus “new model.”

“The old model, you can call it the American Express [Global Business Travel] model, but it is the BCD, American Express, Carlson [CWT] and a lot of TMCs like that, which is basically – they have the agency, they have some partnerships, they have the point of sales, they have the agents and good luck with technology. That’s the old model,” he says.

“The new model is modern. You go to one system, the service is really, really good. It meets the people where they want - people today want to chat, people today want to call you when you are cancelling their trip, immediately in the moment. So that’s the new model, that’s our model, an end-to-end-system.”

Cohen says he expects to see consolidation among the “old model” companies, and “you’ll also see disappearance. Look at Netflix versus Blockbuster - a great example of consolidate, consolidate, consolidate around the old model and suddenly you are no longer there. So I think you’ll see consolidation, but eventually I think that the customers will demand a new kind of system.”

When asked his response to remarks by American Express Global Business Travel chair Greg O’Hara during an interview at The Phocuswright Conference 2020 that TripActions and other TMC startups “basically disappeared from the marketplace [in 2020]...” and “there aren’t any inroads being made the TMC innovators,” Cohen says: “I don’t even know where the statement is coming from and what it is based off. I know it’s not based on our numbers. And eventually you can look at valuations. The investors are kind of voting right now and I think our valuation is a little bit higher than his. Business travel is going to be online like any other thing that you do, and I think if I was Greg O’Hara I would encourage his employees to invest more in technology.”

Looking ahead

Cohen says the ongoing vaccine distribution gives him optimism about the resumption of business travel, and the company is expecting to see a return to 50% of 2019 levels during the third quarter of this year.

The funding is really good news for the industry. It tells the industry that there is the day after, and the day after is coming, and it’s kind of around the corner.
Ariel Cohen - TripActions
Share this quote
And while he does not believe the volume of business travel will be significantly less permanently – and in fact may grow due to new needs – Cohen says TripActions still has “a lot of room to grow no matter what size the business travel industry will get to.”

To do that, the company – which laid off 300 people at the start of the pandemic – is hiring again across all departments.

“I want to make us the number-one player from a market share perspective. I think that today we definitely have the best solution ... but we are not as big as the other ones, so the other thing is to accelerate our go-to-market – to invest more in sales and marketing globally,” he says.

“I’m excited about this [funding] from a TripActions perspective ... but I think it’s also really good news for the industry. It tells the industry that there is the day after, and the day after is coming, and it’s kind of around the corner.”