A British start-up that has developed an integrated advertising platform for holiday rental owners has secured £3 million is seed funding.
Described as the largest ever seed round for a Scottish firm, the TravelNest funding comes from leading early stage venture firms Pentech, Mangrove Capital Partners and Frontline Ventures.
Investors also include Mark Logan, ex-chief operating officer at Skyscanner, who has joined the company as a board member.
The Edinburgh-based firm says it will use the funds to expand its engineering team and further develop its product.
TravelNest was established to help property owners handle the fragmented online distribution sector for holiday rentals.
The firm says owners have to advertise on as many as 40 booking sites to cover the market and as a result up to 56% of dates go unsold meaning they miss out on an £37,000 of revenue per year.
Doug Stephenson, founder and chief executive of TravelNest, said: “This is a real headache for holiday rental hosts.
“Every property is unique and there’s hundreds of advertising and listing options, all of which offer something different.
“It’s very difficult to gauge what advertising equates to in terms of performance for each site and the task of boosting site rankings is very complex.
“This is a massive market but while the B2C side of the sector is well developed, the B2B side has so far been almost entirely overlooked.”
The vacation rental sector is expected to be worth $193 billion by 2021 with the growth of large B2C players such as Booking.com and Airbnb driving demand for ‘alternative lodging’.
TravelNest manages its clients’ advertising through a central platform gathering data from each site to optimise revenue per rental.
An online dashboard provides insight on property views, occupancy and income, as well as comparing the performance of each site.
TravelNest will offer the service free to users and make its money from commission for advertising booked through the platform.
The company launched in January and now has a team of 20 staff, including chief technology officer Alistair Hann, formerly of Skyscanner, and Jeff Pole, previously director of product at Onfido.
To date 90% of TraveNest customers are from the UK but the firm has ambitions to scale globally.
Stephenson added: “We see a very large opportunity to create value by intelligently matching supply and demand. With this experienced group of investors we have support for the long run but our focus right now is on product development.”
Both Mangrove Capital Partners and Pentech recently raised significant funds. Mangrove, an early backer of multi-billion exits Skype and Wix.com, raised $200 million for its new fund in July while Pentech, an early investor in FanDuel and Nutmeg, raised £88 million in May. This funding round is the first investments made from the new funds.
Craig Anderson, Partner at Pentech who joins the board of TravelNest, said: “Doug has spotted an enormous opportunity to help holiday property owners maximise income and is assembling a first class team with very strong conviction.”
Hans-Jürgen Schmitz, co-founder and Managing Partner of Mangrove Capital Partners said: “The TravelNest team is exceptionally gifted. They have built this business out of their garage, with the conviction that the fragmented supply in vacation rentals offers significant potential for growth through intelligence and automation.
“We are excited to part of this challenge as Doug and his team help property managers capitalise on the massive benefits of new technologies and the Internet”.