Two major investors, Openspace Ventures and SOSV, in a video interview with TTG Asia, believe that opportunities lie in mobile and urge companies to think travel as more than just about flights, hotels or even bus tickets.
Travel is still the blue-eyed boy for them because it remains a mainstay of the disruption technology has created, while Asia’s travel & tourism growth and mobile penetration present vast opportunities for startups to disrupt traditional industry players.
Said William Bao Bean, partner, SOSV: “For South-east Asia and South Asia, we’re focused mainly on mobile. It’s the largest mobile-first market, so people’s first experience with the Internet is on their phone and this is an area that we’re focused on.”
He added: “They are looking at experiences to make them happy, to do things with their friends, as opposed to the last generation or the last couple of generations which just wanted to go out to buy things. We think that that’s a huge opportunity and we’re investing in it.”
SOSV is the most active early-stage investor in the world as of Q2 this year in various industries. It started investing in travel in 2004 when it worked on the IPO for Expedia’s subsidiary in China, eLong. Since then, SOSV has made about 15 investments in the travel space, said Bao Bean.
Openspace Ventures’ Hian Goh, partner at the firm, said it has “a lot of dry powder” for 2018/2019 to invest, US$135 million which it recently closed. The focus is on South-east Asia and, again, mobile appeals.
“The interesting thing about travel now is that companies need to think about what travel actually means. With the mobile phone, you can do a lot more than just book flights and hotels, and innovative companies will come out of places which are least expected. They actually are attacking the travel space but they are not setting up another OTA or hotel booking website,” said Goh.
He added: “The average $100 mobile phone now has four times more processing power than the super computer that beat Garry Kasparov in 1997. People don’t realise the amount of information that one has in the mobile device and the willingness of the Asian audience to have you engaged with that information to provide personalised and very effective travel services. Something that is very different versus the Western perspective. I look forward to seeing a lot of disruptive Asian travel companies come up.”
When asked if Asian startups are challenging the status quo, both Goh and Bao Bean pointed to Indonesia’s Traveloka and India’s OYO as proof they are.
“You would think that hotels are done. But OYO came from out of India and is now expanding to China. They’re bringing pretty innovative new model to turning dusty old nasty hotels into something you can trust, are reliable, something you can feel safe about booking. They have made a huge impact in a very short amount of time.”
He added: “As early stage investors, we’re focused on solving problems. This can be hopefully large problems. For example, hotels are getting squeezed by OTAs and their margins are getting compacted. So what can we invest in to help hotels better monetise? Is it sending their guests out of the hotel to do activities or to do restaurants? User acquisition is very important; it’s not just the bed that you sleep in, it’s the range of activities around it.”
Watch the full video to learn how Openspace Ventures and SOSV separate the wheat from the chaff in the crowded startups space.