Travel Startup TripIt Acquired by Seattle’s Concur for As Much As $120 Million; Handsome Exit for Azure Capital
Redmond, WA-based Concur (NASDAQ: CNQR), a specialist in software that helps big companies control travel expenses, revealed today that it’s acquiring TripIt, a four-year-old San Francisco startup providing a virtual travel-assistant service for business travelers.
TripIt’s free service allows travelers to create master itineraries that they can access from the Web or their mobile phones simply by forwarding their travel-confirmation e-mails to TripIt’s servers. A premium version, for $49 per year, adds features such as flight-refund notices when fares drop and automated alerts about flight delays or cancellations. [Update, 1/14/10: We’ve published a separate Q&A with TripIt CEO Gregg Brockway detailing the startup’s services and its history.]
Concur executives say they were drawn to TripIt by its record of rapid growth—the startup has attracted at least two million users since its 2006 launch (the company hasn’t released exact numbers). They add that bringing the company inside will make traveling easier for Concur’s existing clients, while also helping the company reach customers in what Concur president and chief operating officer Raj Singh calls the “unmanaged travel services” sector.
“When you think about a company that started from scratch four years ago and now has millions of travelers taking advantage of its service who, from all reports, swear by the service and love it, there is a lot to admire,” Singh says. “It’s an innovative company with an innovative culture.”
It’s also providing an enviable return its investors. The startup had raised just under $13 million in three rounds of funding that included San Francisco-based Azure Capital Partners, O’Reilly AlphaTech Ventures, European Founders Fund, and other investors. Concur said it will pay $82 million up front in cash and stock, plus up to $38 million in additional payments over the next 30 months, depending on the performance of Concur’s stock.
“It’s phenomenal,” Azure Capital partner Mike Kwatinetz says of the exit. In fact, Kwatinetz says Azure—which provided the lion’s share of TripIt’s $7 million Series C round in March 2010—will earn an even larger multiple on its investment in TripIt than it did in 2008 when eBay bought Azure portfolio company Bill Me Later. (Azure was the largest investor in Bill Me Later and was reported to have earned an 8x return on the $945 million deal.)
“TripIt is a phenomenal company,” Kwatinetz says. “We would have loved to take it much further—it’s a great management team with a great franchise. But it was hard to pass this up.”
TripIt CEO Gregg Brockway said today the Concur acquisition won’t change TripIt’s focus (or its location: the company plans to stay, and grow, in San Francisco). TripIt will continue to offer both free and premium services to individual travelers, while at the same time using new resources from Concur to build additional services for business travelers who work for small and medium-sized companies, Brockway says.
“We will stay free, and try not to break what has gotten us this far,” says Brockway, who blogged about the acquisition today. “It’s about going faster. We started TripIt with a vision for a service that was going to make travel easier, and we’ve made a lot of progress toward that vision, but with the support and resources of the larger company, we can do more.”
Brockway called Concur “an absolute powerhouse” in business travel, adding “it’s a company we have known and had a lot of respect for since we started spending more time in the business travel marketplace.” (As Brockway explained to me as part of this in-depth Q&A, it wasn’t originally clear to TripIt’s founders whether their service would be more appealing to leisure travelers or business travelers, but today 80 percent of the trips tracked through the service are for business.)
Singh says the acquisition makes business sense for Concur because “there is a natural fit or synergy” between Concur’s existing services—used by large companies to manage employee travel reservations as well as travel expense reporting and reimbursement—and TripIt’s products, which are mainly used by travelers employed by companies too small to have dedicated travel offices.
“Here are two companies that serve millions of business travelers, and the services they both deliver are designed to make those travelers’ lives easier,” Singh says. “We saw the unmanaged travel space as something that was underserved, and there’s a great opportunity to deliver value and services.”
But will the end result be to make “unmanaged travel” feel more like corporate-approved managed travel? When I put that question to Singh and Brockway, their answer was a clear no.
“I want to make sure it’s crystal clear…that TripIt is going to stay a free service, and it will stay focused on individual travelers as our core audience,” says Brockway. “But that focus doesn’t preclude us from building services on top of that.”