According to research by Phocuswright, consumer startups have received more funding than business-to-business (B2B) startups in the travel industry. However, the share of B2C versus B2B funding tells an interesting story – it has trended toward B2B companies for years, and in 2021 B2B funding hit its highest share ever, at 39% according to Phocuswright’s travel research report The State of Travel Startups 2022.
This was in part due to $3 billion going to the top four urban transportation companies in China, which all operate on a B2B basis: WeRide ($1.5 billion) HT Aero ($500 million), Deeproute ($500 million) and Momenta ($500 million).
Despite the potential for B2C companies to generate higher revenue, most deals still went to B2B companies into 2022. Although B2P company revenue typically never reaches the lofty heights of B2C juggernauts, their relatively predictable, steady revenue became much more attractive to investors during the uncertainty of the pandemic. Additionally, B2B companies may have better-captured attention of potential customers and partners because openness to technology use for increased efficiency and automation increased in corporate boardrooms worldwide.
Furthermore, scaling a consumer-facing business is only getting harder. Search engine optimization and pay-per-click advertising were low-hanging fruit for smaller consumer companies in the past, but they appear to be saturated now, pricing out most smaller companies. In addition, the sheer volume of options produces a noisy and distracting landscape that makes it more difficult for consumer companies to cut through and reach consumers. On the other hand, dozens of programs and investors have focused on facilitating B2B startup introductions and business deals in the past decade, providing a supportive infrastructure for B2B companies.
For analysis on funding, investors, major verticals, horizontals, business focus, regions, and the outlook on the future, get Phocuswright’s The State of Startups 2022.
This report is available for purchase and included in our Open Access subscription, which also gives company-wide access to the whole library of Phocuswright’s travel research and data visualization.
Hi, I’m Oren, founder at BIGINTRO, a content strategy agency that helps B2B companies drive growth. We develop search, social, PR, and content marketing strategies tailored to business goals. I also have a dog named Milo.