Webcast: Start-ups that adapt will survive but must be realistic on valuations

Travel entrepreneur and Sherpr chief executive Andrew Watson tells Travolution executive editor Lee Hayhurst how he was able to spin up an entirely new package delivery brand as the Covid-19 crisis decimated travel

Travel entrepreneur and Sherpr chief executive Andrew Watson tells Travolution executive editor Lee Hayhurst how he was able to spin up an entirely new package delivery brand as the Covid-19 crisis decimated travel

Travel start-up founders will have to be more realistic about company valuations due to the Covid-19 crisis, but investors will remain interested in firms that reacted well to the pandemic.

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Travel entrepreneur Andrew Watson, founder and chief executive of Sherpr, a luggage and sports equipment delivery firm, said hunkering down will be vital during the lockdown period.

But he said start-ups that were seen to adapt and react to the crisis will survive and emerge in better shape when travel is allowed to resume.

Watson was speaking to Travolution about how he spun up a new brand, Deliver My Parcel, during the Covid-19 crisis as business for Sherpr started to fall away as travel bans were implemented.

“We looked at what was happening and said, okay can we take our existing infrastructure and create something off the back of it that might either benefit people during this period of time.

“Could we actually seize an opportunity without changing the business model drastically, and that’s how Deliver My Parcel was born.”

Watson said Deliver My Parcel, a comparison site for delivery firms, is being built to be fully-automated and has helped to offset falling revenues due to Covid-19.

He said initially Sherpr saw a spike in bookings as people were repatriated and needed to transport their belongings home ahead of lockdown, but he saw that would be short-lived.

“We looked at what was going on and we didn’t know how long we were going to be in this pandemic, how long travel was going to be restricted and we’re going to be stuck inside.

Pivot quickly

“Ultimately it was about what we could take on without changing the business too much, without changing what we do on a day-to-day basis and how we could spin up something else quickly.

“So, we turned Deliver My Parcel around in about five to seven days from start to finish.”

Watson conceded not all firms are able to pivot so quickly, but he said all start-up founders have to ask themselves whether there is something they can do to right now to change their business.

Sherpr was fundraising before Covid-19 hit and continues to look for investment with a planned launch in the US still happening although in more of a low key way as travel recovers.

Watson said: “It’s an interesting time for start-ups, in particular in travel, and how that fundraising should be approached.

Investors ‘challenged’

“We’ve spoken to some VCs and to angel investors. Some are, I think they use the word, challenged. Investing in a travel business right now is, from an investor’s point of view interesting.

“If one landed on my lap it would have to be a very, very good price in terms of the valuation and that’s something that we will have to adjust to during this period of time.

“Smart money from some smart people who see the long-term benefits of the business will go a long way. But as founders and start-ups we’re going to have to be very flexible with valuations.

“Fundamentally, we’ve got to survive, start-ups have to survive, like easyJet and British Airways, it’s exactly the same for us.”

Prior to Sherpr Watson co-founded airport navigation app FLIO which was chosen as one of the first entrants to the easyJet and Founders Factor accelerator.