Startup pitch: TravelStarter puts a travel and tourism twist on crowdfunding

TravelStarter aspires to be a global crowdfunding platform for travel and tourism business projects.

It is a two-way street. It enables everyday travelers to support local projects at their next destination and get “travel perks” (like a free place to stay or free professional photographs of their trip) in return.

Locals run campaigns to fund projects, such as opening a cafe or a hostel. The structure of their rewards, and the travel-specific mission, are the justifications for having a separate platform from today’s largest platform: Kickstarter.

Let’s say a person is going to Paris but instead of staying in a hotel room, he logs on TravelStarter.com and checks the various projects that people have in Paris.

By funding the project he gets a couple of nights of accommodation, a bike rental and a local tour guide.

TravelStarter has a secondary mission of encouraging travelers to engage in more locally instigated experiences and thus conserve a diversity of communities against the onslaught of mass market, global chains.

The bootstrapped startup is based in Slovenia, and its team is small. Co-founders Anushka Cerovsek Beltram (CEO) and Blaz Jemc (COO) have tapped a part-time social media ambassador Mic Melansek and have contracted with some developers.

TravelStarter has created a Vine to illustrate its premise.

Q&A with Anushka Cerovsek Beltram:

Tell us how you founded the company, and what made you decide to jump in and create the business.

I’ve been connected to travel all my life through sports, traveling and working in travel industry, but my background is also business and entrepreneurship.

I see crowdfunding as it’s currently offered doesn’t do enough to support avid travelers or sustainable tourism. I kept thinking about how we can link the crowdfunding idea with travel and tourism.

I’ve always believed that travel is something that makes people richer, adds to the whole meaning of life. But we also see how travel and tourism have negative impacts, how tourists just take without giving anything back.

That’s the ideological background, from which TravelStarter was born. We want to connect travelers with local communities. A traveler or tourist can support someone’s project by funding him, and in return he gets a travel perk at the destination he is traveling to.

Estimation of market size?

We are targeting two groups. On one side we have travelers and adventurists and on the other side local businesses connected to travel and tourism.

Let’s take USA as an example, where travel is one of the leading industries.

Direct spending on leisure travel by domestic and international travelers totaled $597 billion, and 1 out of 8 jobs depend on travel and tourism, and 84% of travel companies are considered small businesses.

This is what we are targeting. We want to support travel, local businesses, and create more jobs in tourism along the way.

Revenue model and strategy for profitability?

At the moment the revenue model is based on percentage of projects – 5% if the project is fully funded and 8% if the project is not completely funded.

In the future we plan to go from donation-based model to equity-based model, which raises the revenue a lot. But as I mentioned, we are a hybrid platform, so we are planning to go outside crowdfunding as well.

Equity crowdfunding would be our next step if we get some venture capital money because the expenses are too high for us at the moment. But on the other side, the revenue from equity crowdfunding is much higher.

What problem does the business solve?

Travel industry as a whole has lost a lot of its uniqueness and mass tourism is not only degrading travelers’ experiences, but also affecting the environment negatively.

We give local small businesses and individuals a tool they can use to promote and expand their venture through a sustainable and crowd-controlled process and at the same time it connects global travelers with local communities.

So, we basically give travelers who dislike impersonal leisure options a way to upgrade their vacation with local and meaningful encounters, reduce their negative impact on the environment, and support sustainable and responsible businesses.

How did the initial idea evolve and were there changes/any pivots along the way in the early stages?

At the beginning we were just a crowdfunding platform for travel. But now we think of ourselves as an incubator.

Why should people or companies use the business?

There are two aspects of using our platform. The financial one. People always need money for their ventures, whether for traveling around the world or opening a bakery shop in Paris or a hostel in Nicaragua.

The second one is the altruistic one.

A lot of people in the world want to support each other and their great ideas. Giving back to society is something we all aspire to. We support sustainability and it is obvious that this is the only way ahead not just in tourism and travel.

What is the strategy for raising awareness and the customer/user acquisition?

At the moment we are in beta so we are still testing the market. The idea behind the platform is not so transparent, so we are educating people about what we do.

We are working with travelers and entrepreneurs who have an idea or a project that fits onto our platform.

Our strategy is mainly word-of-mouth and social media marketing. The primary focus now is to get more great projects on the site.

Where do you see the company in three years time and what specific challenges do you anticipate having to overcome?

We want TravelStarter to become a global platform
– where users can fund the projects they like and experience local life through their donations
– where local business and entrepreneurs can get funding for their new ventures and ideas

In short, we want TravelStarter to become THE website for sustainable tourism development and funding.

Our biggest obstacle is getting people to understand the concept of crowdfunding and familiarizing them with a new approach to traveling. We also need to generate a certain level of trust between the users and make sure we can handle all the logistics behind our travel rewards.

What is wrong with the travel, tourism and hospitality industry that requires another startup to help it out?

Like any other industry it is focused on profit. There is not a lot of finance for services that are not profitable, even if still necessary.

Building a hotel that is eco friendly and sustainable requires more finance, but the revenues will stay the same. So people usually go where the money is.

TravelStarter wants to connect like-minded people who will support projects that they relate to, without considering the actual returns on investment.

What other technology company would you consider yourselves most closely aligned to in terms of culture and style… and why?

I would say Couchsurfing, since it also supports local and sustainable tourism. However we believe our platform takes the things much further.

Just like Couchsurfing, it creates meaningful and genuine travel experiences, but at the same time it also supports local communities by funding creative business ideas directly.

Tnooz view:

TravelStarter’s heart seems to be in the right place, but can it execute? Who doesn’t want to help the little guy get their dream project funded while encouraging Couchsurfing-style travel experiences full of local charm?

But launching a peer-to-peer marketplace is tough. How to get enough projects and enough backers? The startup is testing market receptivity to its positioning as a niche platform for travel and tourism crowd-funding.

Enterepreneurs launching a project have a great incentive to get the word out about their campaign on TravelStarter. But TravelStarter isn’t providing much advice right now on how an enterpeneuer could drum up publicity.

Maybe the site should create advice to users on how to get the most out of TravelStarter, similar to this advice for using KickStarter and this advice on using Indiegogo.

There are some other online tools for startups that might be relevant, too.

But there’s lots of competition in this space to build portals to help small businesses locate investors to replace the need for bank loans. DealStruck, Lending Club, and SoMoLend.

TravelStarter may wear its heart on its sleeve, but it needs to have the inner toughness of a Hong Kong businesswoman if it’s going to get far.

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Sean O'Neill

About the Writer :: Sean O'Neill

Sean O’Neill had roles as a reporter and editor-in-chief at Tnooz between July 2012 and January 2017.

 

Comments

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  1. Sebastian Klassman

    Travelstarter has a unique concept. The tourism industry is enormous and of course there is potential. You can see by some of the campaigns, which ones are successful and those that are not. Whenever rewards are structured right and project has meaning, it can work.

     
  2. Vicky

    It’s all too easy to say sustainable and responsible businesses will be supported, but there is no mention of how those businesses are vetted to be sustainable or responsible.

    Sustainable and responsible tourism is about impacts (positive vs negative and their trade-offs) which isn’t even mentioned, not how the operators financial funding works. Impacts have to be able to be measured and monitored, and businesses impacts reviewed to determine sustainability. Mass tourism operators such as Thomas Cook and Tui are actually taking loads of initiatives and making huge inroads into their impacts.

    Conversely, there’s too many organisations and projects making sustainability claims without substance, and that’s greenwashing, and gives real responsible tourism a bad name. Not just that, they are too often intentionally set up to exploit both local places, people and travellers alike, often by local people or operators.
    Unfortunately, wanting to ‘give back’ and providing funding is not good enough – good intentions can have the most irresponsible and unsustainable impacts, just look into volunteer tourism when it’s not done properly (and it rarely is).

    With no mention of verification or monitoring procedures, this is not responsible but naive – a marketplace merely matching funding to wanting-finance has the potential for damaging consequences on local people and places. Local funding from tourists does not equal sustainable or responsible tourism.

     
  3. Peter Cooper

    “TravelStarter wants to connect like-minded people who will support projects that they relate to, without considering the actual returns on investment.”

    Fatal Flaw in the methodology. All humans consider the return on investment in any transaction.

     
  4. Sarah Hughes

    It is tough being any kind of travel start-up these days, especially if you’re not out of SV or TechCity or some such, with a golden ticket in VC mega money, an existing network, an ex-Google or Paypal founding member, a billion extra braincells to burn each night and an iron chin!

    Anushka and Blaz, well done for getting started and very best of luck to you! My advice is make this work first in a very local catchment, one you can personally connect with regularly, and do some foot leather in. Not only will you learn fast but the experience is likely to be incredible.

    Tnooz, I love seeing you cover start-ups from across the globe. Keep ’em coming.

    Have a lovely weekend everyone.

    Our strategy is mainly word-of-mouth and social media marketing. The primary focus now is to get more great projects on the site. – See more at: https://www.tnooz.com/article/startup-pitch-travelstarter-crowdfunding/#sthash.9IQRXNTt.dpuf

     
    • Sarah Hughes

      My post should have ended with ‘Have a lovely weekend’, and not the copy and paste from the article above. That wasn’t intended, indeed not sure how it jumped in there, although I am almost certainly did highlight it at some point. Sorry ’bout that. I did email Tnooz right away and ask for an edit, but no reply. Not a first, guess you guys are super busy. This is off post but just to say that a small window for edits, or a preview feature would be appreciated so that posting from a small device is more accommodating. Thanks!

       
 
 

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