Travel booking site Travelstart lands $40m, asserts investor confidence

Cape Town-headquartered travel booking company Travelstart has secured a whopping US$40-million from Amadeus Capital Partners and MTN, which is an investor in the VC firm. The significant capital injection again reaffirms investor confidence in South Africa as a fruitful market for internet companies — a space which has seen growing interest within the last year.

Founded in Sweden over a decade ago, Travelstart moved to South Africa in 2009 to focus on the growth of emerging markets. The online service today provides two million travellers in 16 countries with real-time access to thousands of flights. It operates in 16 countries, including South Africa, Nigeria, Kenya, Turkey and UAE and today employs over 200 people, with 150 of its staff operating out of Cape Town.

While the travel booking site already claims 75% of Africa’s market share, the partnership with MTN will enable it to tighten its grip on the African continent and other key emerging markets.

“The capital increase is fantastic for us,” said Travelstart CEO Stephan Ekbergh (pictured above). “It gives us a lot more freedom and possibility to do stuff we couldn’t do in the past, primarily scale up our mobile effort and be a lot more aggressive in our marketing.”

The entrepreneur said that even though MTN is a behemoth of a company, it’s very much run as a startup — it understands the power of the mobile device as a prime asset.

In a press release, Herman Singh from MTN said that the investment positions the mobile operator as an “enabler of exciting new leading edge businesses”. “The MTN footprint, subscriber base, payment capability, network and brand awareness strongly underpin the synergies already being manifested in our other investments,” he said.

Read more: VC to pump $10m into South African, African startups [update]

Alongside its flagship flight-booking product, Travelstart is also behind its B2B offering called neXt as well as Flapp, which allows users to book flights on popular routes. Last year it acquired Hong Kong-based social intelligence company called Satisfly.

Travelstart’s product suite is set for a revamp, helping customers through the whole flight-booking journey. “We believe that the beauty of mobile is that it makes everything so personal,” Ekbergh said. “We’ll not only look at the transaction, but also check-in or even changing your flights and so on.”

Lucrative emerging market

This year so far has been kind to South Africa’s startup space. Last month VC firm Silvertree Internet Holdings committed US$10-million investment to South African and African startups. This was followed up with record revenues generated and renewed interest from renowned international players.

Self-proclaimed opportunist, Ekbergh believes that it’s only a matter of time for travel and ecommerce to grow in South Africa.

“Of course [ecommerce] is going to grow as it’s done in the Western world. But everything you do in Africa has to be very long-term. You can’t expect that West Africa, for instance, should bloom within the next year or two. It’s going to take a bit longer,” he said.

Read more: Travelstart acquires Hong Kong’s Satisfly to boost its social intelligence chops

“We saw that there’s a huge market that’s going to grow a lot. We want to be part of that and part of changing the online travel landscape here. You don’t have to be a rocket scientist to see where this going,” he explained. “It’s going to have the same growth and dynamics than in other countries. The question is just when it’s going to happen.”

Amadeus Capital Partners’ Andrea Traversone, who joins Travelstart’s board, said that South Africa is quickly becoming a very interesting place where new technology companies are being started:

This is particularly due to the very fast adoption of smartphones and mobile in general, which is happening not only in South Africa but in the rest of Africa as well. This combined with a growing talent pool found locally of both engineers and entrepreneurs make us feel confident that we will see even more deal flow in the coming years from this region.

Ekbergh did however point out that there are some deterrents in the local market. For one, he noted, the rules of the game in Africa is different compared to Europe. “Taking money is more complicated, taking money out is even more complicated. Finding talent here is very, very hard and taking talent from overseas to here is extremely hard as well. All these things make it a bit more complicated.”