[Corrected 12/15/16, 6:24 pm. See below.] Hopper, the maker of an app that helps consumers find and book cheap flights, could become the Boston area’s next big travel technology company. It’s certainly one of the better-funded ones, thanks to a major investment announced today.
In a press release, Hopper said it has raised $82 million in Canadian dollars (or about $62 million U.S. dollars) in a Series C funding round led by Caisse de dépôt et placement du Québec, a large pension fund manager based in Canada. The round includes $66 million CAD (roughly $50 million USD) in new funding; the rest is from a convertible note announced in March, according to an e-mailed statement attributed to Hopper co-founder and CEO Frederic Lalonde.
Earlier backers Brightspark Ventures, Accomplice, OMERS, Investissement Québec, and BDC Capital IT Venture Fund also contributed to the round. The company said it has hauled in $104 million CAD ($78 million USD) in total venture capital.
Hopper got started in 2007 in Montreal, Canada, and opened an office in Cambridge, MA, in 2011. The Montreal office is considered the company’s headquarters, but its employees are split evenly between the two locations, according to Brianna Schneider, Hopper’s director of communications. [An earlier version of this paragraph incorrectly identified Cambridge as the corporate headquarters. We regret the error.]
The company was initially developing a travel discovery website built on a humongous trove of data. It spent several years crawling the Web for quality travel data—think user-generated blogs, photos, and other content—and structuring that information. The idea was to improve the online travel discovery process and enable users to search for specific things, like a vacation rental in Spain that’s within walking distance of a golf course.
Hopper ultimately decided to change course and build a mobile app that aims to simplify the flight-booking process. Purchasing flights makes people “anxious,” Lalonde wrote in the statement e-mailed to Xconomy. “You feel like if you just opened up another browser tab, you may get a better deal,” Lalonde said. (Lalonde is pictured above on the right, with Hopper co-founder and CTO Joost Ouwerkerk.)
After Hopper released some initial data on how people could save money on flights and the New York Times covered it, the startup quickly had over a million people visit its website, Lalonde said.
“The market signal was so strong that it was one of the easiest decisions we ever made” to switch gears to the flight search and booking app, Lalonde said.
But the company’s earlier work wasn’t wasted. “We actually ended up using the vast majority of the code that we had written and the data we collected,” Lalonde said.
Here’s how the app works: Users search for a trip, and it crunches its archive of trillions of past flight prices to predict when a flight to that destination will likely be cheapest. If the app recommends a user wait to book a flight, it can keep tabs on fares and notify the person the second prices drop. If the software calculates that a user should jump on the purchase now, he or she can quickly book the flight within Hopper’s app.
The app was released in early 2015 and quickly took off. In the past year, it went from 1 million downloads to more than 10 million downloads, the company said. Users are booking $1 million worth of flights per day through Hopper’s app, it said.
Some of Hopper’s revenue sources include commission payments from airlines for flights booked through its app and a $5 per ticket booking fee charged to customers. “Since our average user savings is $50, people are very happy to pay it, actually,” Lalonde said.
The company’s growth speaks to the changing habits of travelers, who … Next Page »