The past few years have been tough for Omio, the Berlin-based travel search and booking platform that saw 98% of its revenue evaporate overnight when COVID-19 hit Europe in spring 2020. But the company kept trucking and found some light at the end of the tunnel: Today, it reports revenue that has rebounded to more than double pre-pandemic levels. It also announces the closing of an $80 million Series E.
Round E includes support from some new investors, including Lazard Asset Management and Stack Capital Group. Existing investors renewing their support for the nearly decade-old company include NEA, Temasek and funds managed by Goldman Sachs Asset Management, among others.
It is Omio’s first funding since a $100 million convertible note it took out just under two years ago to weather the first waves of the coronavirus crisis. In total, it has raised around $480 million since its inception in 2013.
The new funding will be earmarked for reviving global expansion activities that necessarily had to take a step back during the pandemic – including through mergers and acquisitions; and doing more with its transportation data and inventory by expanding its partnerships (existing collaborations include ties with Kayak, Huawei, and LNER (London North Eastern Railway), among others. Investments in hiring and product development are also planned.
“When COVID-19 hit, we put this global expansion strategy on hold, so it’s now back on track,” founder and CEO Naren Shaam told TechCrunch. “But with a slightly different twist – and the twist is basically we’re very focused on our learnings and our scars that we’ve acquired during COVID-19. So we proceed in a much more disciplined way.
That means the preference will generally be “build versus buy”, he says – but with the possibility of strategic acquisitions for selective technology and/or inventory to support further global scaling.
As things stand, Europe remains Omio’s biggest market – but Shaam says demand in the US, where Omio was launched just before the pandemic, has “bounced back”, so it seems to again optimistic about growth prospects above the pond.
The travel startup isn’t disclosing a valuation of its business at the last raise, but that’s essentially a point of principle for Shaam, who laughs off the question. “We never comment on the valuation,” he says, adding, “Let’s just say I’m building a business for the long term, so I’ve never really focused on that.” (Although it seems fair to say that the August 2020 increase was a downgrade, and the E-Round is back.)
Having a long-term mindset in the midst of such a shock crisis for the primary industry your business is built for was probably key to getting Omio through the worst times of the past two years – as well as to prepare him for any trouble that might lie or hide ahead. Other pandemic-shaped tunnels remain possible, of course, given that the COVID-19 virus continues to evolve.
One of the ripple effects of the crisis has been to force startups in affected industries to focus tightly on managing and reducing their costs. Omio is no exception – which is why a slightly more modest increase is now all it needs to stay on track now, per Shaam. (We’re also told the Series E boost is expected to last two to three years.)
“COVID-19 has had a huge impact on us. We had to focus on the costs. And we really kept a very lean business coming out of COVID-19,” he says, describing himself as “very happy and humbled” that the business “survived” – before immediately qualifying the remark with: “And not just survived; but we managed to come back so strong that we are now making 2x the revenue of 2019.”
“The travel industry as a whole has yet to rebound 2x from 2019,” he also points out. “We’re significantly more efficient – the path to profitability is much closer, which just tells us that we don’t need to keep raising big capital and I’d rather be independent of that as soon as possible. It’s So it’s largely a decision about where the business is at now, rather than the need to simply maintain larger tours.
How close is Omio to profitability? Shaam characterizes the milestone as now looming on the horizon – saying, “We see very clearly [it] Short term.”
“Overall, it also depends on the efficiency of the business,” he adds. “We get more efficient with scale and as we grow we get even more efficient – which is almost a bit counterintuitive because when you scale really fast you lose efficiency and you have to catch up. “
Asked what’s happening further down the rails – and whether Omio is planning an IPO – Shaam calls it “a little premature” for such plans, while signaling that’s where he hopes to end up in. a not too distant future. (“The company is more ready to be – hopefully – a public company one day soon,” is how he puts it.)
That said, he also highlights the current state of public markets, with tech stocks continuing to take a beating, which is obviously holding back any progress on this front at this time.
“We’ve created discipline internally from an operational perspective — our operating leverage has increased significantly,” he also tells us. “We are significantly more profitable on a contribution margin basis. Our Opex is low. The two companies, Omio and Rome2Rio that we have acquired, significantly exceed all internal projections that we had. So for now we’ll just keep – as we do anyway – the financial close on a quarterly basis with IFRS [international financial reporting standards] etc So we have – let’s say – many, if not all, of the tools a public company needs and we’ll just keep an eye on the markets.
Omio operates in a space with no shortage of competitors to grab travellers’ attention, but its platform stands out for being multimodal, meaning it can cover multiple types of transport, from buses and trains to flights and ferries (with built-in price comparison) – making it a more comprehensive option for trip planning compared to (only) consulting train booking sites or flights.
That said, travel doesn’t have to be a complex, multi-step affair; Omio can sell you a ticket only to travel from destination city A to B (or for an airport transfer), also using one mode of transport. But there’s no doubt that the main hub excels on the roads less traveled, as it focuses on building its inventory at scale, rather than concentrating efforts around major hubs. Which means that as the pandemic has evolved into a longer tail of behavioral impacts – changing how, where and even when and how people travel – his company seems well positioned to adapt and respond to this. changing demand.
This includes the ability to respond to growing concerns about climate targets – and the need to reduce emissions from the travel sector – given Omio’s (when it was called GoEuro) initial focus on train travel which remain a much more sustainable choice than the plane, for example; as well as the years of work he has put into onboarding national rail companies with his booking platform. (A recent addition is Portugal’s state-owned rail company, Comboios de Portugal – Omio becoming the first third-party booking platform to sell its tickets.)
“There are underlying fundamental shifts in travel consumer behavior that have worked to our advantage,” Shaam says. “When COVID-19 hit, we focused on these as a bet – and invested in these – which were more ground transportation, more app-based reservations (vs. kiosks)… more focused on our core strength, which is off-hub travel; small towns – so it became, during COVID-19, “work from anywhere”, go to less crowded places – and now it’s more like where people travel; I won’t say “long tail”, but certainly not only at crowded hubs.
“And all of these destinations need access to ground transportation – and these customers are booking on mobile – so those kind of underlying shifts are very, very strong and we’ve been able to capture a lot of that… So hopefully that we have taken a good share of the market given that revenues are relative to the industry as a whole.
Asked about the toughest time he’s faced as a founder since the pandemic hit, Shaam recalls the revenue impact of the first wave of COVID-19 that hit Europe in late March/early April 2020, when Omio saw 98% of its revenue dry up. at the top. “And I wasn’t sure how to deal with it, whether or not we were going to survive at the time – so it was a tough time, followed immediately by furloughs, restructuring… so it was just a [hard moment] after another.”
But he also describes a second difficult moment that continued in those years, due to the uneven impact of COVID-19 – and which he says he found even harder to navigate. Even if, at the end of the day, the company that emerged from the pandemic, with all its COVID-19 scars, is necessarily a stronger, leaner and more engaged company.
“There were specific industries that were totally entrenched…and other industries that were seeing their best days. And it was a lot harder, as the CEO of one of those companies, to navigate that,” he says. “Labour markets are fluid and [people] who believed in the company stayed – and that’s great for me because it shows they believe in the company and I’m very grateful for that.