Skyscanner makes it to the ‘unicorn’ club
Though the company insists that it has no plans to go public yet, investors are hanging on for the ride, writes Sally White
Even in an industry well known for its globalisation, travel metasearch Skyscanner stands out in online travel. The list for this month’s fund-raising is blue-blooded and international, reflecting the international popularity of the sector with investors.
Next major move is expected to be an IPO, but for now, with a valuation estimated at $1.6 billion this British company has made it to the exclusive tech ‘unicorn’ club for $1billion-plus companies.
Skyscanner has taken its time before going for a major slug of money, and with an established track record has been able to cherry-pick. Founded in 2001, and without much outside investment, it was quickly profitable. It was formed by three IT professionals, Gareth Williams, Barry Smith and Bonamy Grimes, after one of them was frustrated by the difficulties of finding cheap flights to ski resorts.
CEO Gareth Williams Skyscanner says in a blog: “Skyscanner has enjoyed high double-digit growth rates for some years now, and has been profitable since 2009.”
When it comes to future expansion, Skyscanner has already moved from merely flights to hotels, car hire products including airport transfers and even campervan offerings, reflecting a growing trend towards multi-modal metasearch (see EyeforTravel: The rise of the multi-modal traveller and a new breed of metasearch, Jan 21, 2016). Increasingly Skyscanner is also spreading its wings internationally. According to Nikhil Gupta, Skyscanner Director of Hotels, in July 2015, for example, the campervan offer was launched in 18 markets including the UK, Ireland, Australia, New Zealand, USA, Canada, South Africa, India, Singapore, Portugal and Brazil.
Everyone is looking though the multiplicity of ways to invest in travel, one of the world’s fastest growing industries. Skyscanner’s numbers are convincing – the company announced revenues of £93 million in 2014, a rise of 42% on the previous year. The Daily Telegraph has a pre-tax profit figure for 2014 of £12.6m, down from £22m, but the company says this was because of staff expansion and product development. Skyscanner claims to have 50 million users each month, in 30 languages and 1,200 direct connections with partners to provide content.
Five new investors have put in to the tune of $192 million and they range the world. Funding was arranged by both a US and a UK broker namely Goldman Sachs and Numis. Among the investors there is Artemis, the UK-based international fund group, Baillie Gifford, the Edinburgh global investment managers, Khazanah Nasional Berhad, the Malaysian government’s strategic investment fund and Vitruvian Partners, a European private equity group.
Silicon Valley heavyweight venture capital group Sequoia Capital was an early investor. Another Scot was also in early: fund group Scottish Equity Partners.
Just to tick off the continents, although this time Skyscanner has put money in, it already has a link-up with Yahoo Japan – last July it announced a 51%-49% JV with Yahoo to set up Skyscanner Japan. And as long ago as 2012 it began a partnership with China's largest search engine, Baidu. Two years later, in 2014, it bought Chinese travel search engine, Youbibi.
While based in Edinburgh, Skyscanner is itself pretty international with offices also in Barcelona, Beijing, Budapest, Glasgow, London, Miami, Shenzhen, Singapore and Sofia. The site began life listing European budget airlines but has since expanded its search index to include most major European carriers. This ranges from BA to KLM and Virgin. It has also expanded its geographical reach to include carriers to, from and in the US, Canada, Asia and other parts of the world.
Much of Skyscanner’s growth is thought now to be coming from Asia
The money raised could go to making the company even more international, since it has indicated that it wanted a war chest for deals. However, it also told the Financial Times that it gave Skyscanner muscle to “fend off takeover offers from larger rivals”. That means it has the cash itself to buy out any shareholders who want to take profits, rather than see their stakes sold to outsiders.
Ahead of the fundraising, city rumours named two potential Asian buyers of any stock that might be available. These were the £100bn Singaporean sovereign wealth fund Temasek and Softbank, the Japanese mobile-operator-turned-global-technology-investor. Much of Skyscanner’s growth is thought now to be coming from Asia.
Skyscanner is not responding to the IPO stories, saying just that it has no plans to go public any time soon. It takes the view that it is “fortunate to have patient investors”. With Skyscanner’s track record, they probably think it is going to be worthwhile holding on for the ride.
Want to find out more about the exciting Asian market? Join us in Singapore for TDS Asia (June 15-16). Also, earlier this year, in London in April, Nikhil Gupta, Director of Hotels, Skyscanner will be sharing his insights into the fast-growing metasearch sector