itravel | Updates

By Axel Schmiegelow

itravel FAQ on Crowdinvesting, Artificial Intelligence and Blockchain

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Dear Companists,

We would like to thank you for your support! Together we were able to reach the €100,000 mark within only a few days. We have received many great questions and would like to publish our first update in response to these.

 

Co-investment received

The contracts for the lead investor VCDE’s co-investment were signed upon the launch of the Companisto campaign. We are pleased to announce that the full amount of the promised funds has arrived. VCDE’s renewed investment at a higher valuation months after their first participation in the company as investors demonstrates their confidence in our value development. Companies like lastminute.com and Trivago are examples that disruptive companies in the travel industry are also successful in terms of company valuation. We were able to win investors that were involved with these companies (Alain Roderman from Expon Capital with Lastminute.com and Howzat Partners with Trivago), and benefit from their experience and their knowledge of the industry.

 

A) Frequently Asked Questions: The investment

A1 Why equity crowdfunding?

As a high-tech company in the travel industry, we have successfully proven ourselves on the market with the fundamentally new approach of eliminating intermediaries in the international holiday travel market and giving individual travelers direct access to local experiences and services. We were not yet financed by the crowd, but by business angels and venture capital companies.

itravel decided on a Companisto campaign in a more mature phase of its development, because Companists can also be itravel customers and contribute valuable critical suggestions as both investors and customers. The many thoughtful and discerning comments on Companisto that we have received and benefit from already verify our assumption.

Companists can support us not only by investing but also by doing the following:

  • Try out the trips and website and give us your feedback.
  • Refer us to friends who can become customers
  • Let us know what kinds of trips and travel components you would like to see added to our site
  • Carefully follow the preparations for the token sale for our block chain system and get involved with your support and constructive criticism

 

A2 Why the high valuation? Does it match current sales figures?

In the last 4 years, we have developed itravel to market maturity with renowned private and VC investors who have experience in the industry; thus, unlike many other equity crowdfunding projects, we are not at the beginning of our development.

With the almost EUR 11 million invested so far, we have financed the development of technology to date, as well as a product range of more than 5,000 travel combinations in 65 countries and the development of a customer base of almost 10,000 customers and a total of around 60,000 newsletter subscribers and social media followers.

In order to obtain a market-induced company valuation, we oriented ourselves along publicly available multipliers from transactions (transaction valuation multiples), i. e. company sales.

In recent years there have been numerous comparable company disposals in this sector, including the following in Europe:

  • EQT Private Equity buys 100% of the shares in Kuoni (Switzerland) for 2.8x revenues and 14.8x EBITDA in 2016 (goodwill/valuation: EUR 1.5 billion )
  • HRS Hotel Reservation Service buys 100% of the shares in Hotel.de (DE) for 1.6x revenue and 37.1x EBITDA in 2011 (goodwill/valuation: EUR 63 million )
  • Sequoia Capital acquires 100% of the shares in Skyscanner (UK) with an 8.7x revenue multiple and 23.5x EBITDA multiple in 2013 (goodwill/valuation: EUR 589 million )

and in the USA with even higher multiples:

  • Expedia acquires 100% of the shares in Homeaway (US) with a 6.9x revenue multiple and 28.4x EBITDA multiple (goodwill/valuation: EUR 3.1 billion)
  • Liberty Interactive buys 4% of the shares in Tripadvisor (US) with 11.1x revenue multiple and 23.6x EBITDA multiple (goodwill/valuation: EUR 622 million)

 

Using these multipliers realized in the market, itravel's potential exit scenario in 2020 and planned revenues of EUR 23.1 million and EBITDA of EUR 1.3 million gives itravel the following range of enterprise value (Entity Value):

Assuming a conservative enterprise value, we have estimated this financing round with a valuation of EUR 20 million, as we assume an annual increase in the enterprise value of 20%. This corresponds to a company value of approximately EUR 34 million in 2020.

Comparing this value with the currently determined multiples of listed companies from the travel industry leads to similar valuation approaches. Examples of this are tripadvisor (23.1x EBITDA multiple and 6.2x revenue multiple) or the On the Beach Group from the UK (17.3x EBITDA multiple and 5.2x revenue multiple).

Taking into account the value of the previously invested capital of around EUR 11 million, which is realized at a high level of technology and a broad customer base, and deducting this from the valuation, a calculated enterprise value of around EUR 9 million remains. This corresponds to 1.1x of the booking volume for the current financial year, of which half has already been achieved. Compared to the above-mentioned multiples, this represents a moderate rating, which leaves sufficient room to allow a profitable development of a Companist's investment.

 

B) Frequently Asked Questions: Distinctive features of the business model

B1 Direct Booking

Direct booking has already been implemented technically, for example for the following products:


It is not yet operational throughout because many customers want or need advice, especially in order to better understand experiences or to compile complex round trips. Due to the LiveChat technology and the interactive offer forms - complete with asynchronous chat - which we use if necessary, this consulting process is very effective not only for the customer but also for us. Typically, we do not replace a customer's direct booking at Expedia; instead, we replace the annoying visit to the travel agency, where customers don't always find a knowledgeable sales representative.

However, our vision for the next two years is that the "linking" of travel components will become so simple and attractive that customers will increasingly opt for direct online transactions. This tendency is already clearly visible in our statistics for regular customers.


B2 Artificial Intelligence

The term "artificial intelligence" is used in a variety of ways in public and is sometimes abused, although true artificial intelligence that would pass the so-called Turing test has not yet been realized. A very simplified but helpful overview of the areas in which the principles of artificial intelligence are implemented can be found in the following graphic:

 

itravel - artificial intelligence

Source: Callaghan Innovation

 

We utilize one aspect of machine learning in order to determine overlap between individual travel components with the preferences of respective customer groups through software-supported analysis of implicit data structures in the behavior and preferences of users when categorizing products. These patterns are then used algorithmically to control the assembly, display and marketing of the components. This improved accuracy noticeably increases the sales quota.

These analyses and insights are also used in the development of new travel modules and marketing planning to achieve better results.

For example, last autumn, we established that customers who postponed their original interest in destinations such as Oman or Morocco due to Islamic attacks now prefer to travel to Iceland and Ireland instead. No established tourist operator would arrive at this conclusion independently, as this does not correspond to human intuition. However, it has brought us an increase in sales in Ireland and Iceland as opposed to a slump in sales due to the absence of bookings in Oman and Morocco. Machine learning thus has a direct influence on our business model in terms of sales success and product management.

If you would like to learn more about the topic, the following two blog posts are certainly of interest to you:


You can read a fundamental Harvard Business Review study on the impact of artificial intelligence on business models here:

 

B3 Blockchain

Unfortunately, public discourse on block chain, crypto currencies, and bitcoin are characterized by hype and misunderstandings. However, an important application of block chain technology plays a very specific role for our business model, which we would like to explain in detail here:

Costs and security of purchasing are of great importance for our business model. The traditional sequence in tourism typically involves the following steps:

 

itravel - blockchain

 

Each of these steps is prone to errors and entails banking fees and currency risks. It is obvious that this process can be replaced by a software-supported, rule-based confirmation in the block chain ledger, thus avoiding errors, saving time and bank charges, and eliminating exchange rate risks.

Our technology aims to replace these many intermediate steps with a smart-contract-supported transaction that triggers rule-based payment of the booking in one transaction.

The currency conversion can be carried out by the supplier according to his own wishes after the release of the amount from his own electronic wallet. The savings of up to 8% of the travel value in expenses are very relevant to the profitability of the business model. 

We hope to have answered all your questions with this update. If you want more details on certain topics or if you have other questions, we look forward to new comments in the discussion area.

 

Kind regards,
Axel, Gerald, and the itravel team



Comments

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Note

Investments in startups and growth companies offer great opportunities, but they are risk investments. In the worst case, the entire investment amount may be lost. Consequently, investments in startups or growth companies are unsuitable for retirement plans. However, there is no obligation to make further contributions. Investors can minimize their risk by diversifying the amount they invest in startups and growth companies and not investing the entire amount in one startup or growth company. Professional investors often follow this strategy because it causes the risk to be distributed among several investments. In this way, successful investments can balance other less successful investments.

The shares of the investors on Companisto are subordinated profit-participating loans (partiarische Nachrangdarlehen). Such loans are shares in a business with similar characteristics as equity. If the company becomes insolvent or is liquidated, the claims of the investors (Companists) – just like those of all other shareholders of the company – will be satisfied from the assets in the insolvency or the assets in liquidation only after the claims of all other external creditors have been satisfied. Thus, Companists are treated like any other shareholder of the company during insolvency or liquidation proceedings.

The company information published on the Companisto website is provided solely by the companies. The projections made by the companies do not guarantee successful development of the company in the future. Consequently, investments in startups and growth companies are suitable only for those investors who can cope with the risk of a total loss of the capital invested. Investors make their own independent investment decisions and bear all risks themselves.

The investments are provided and issued by the individual companies. Companisto is neither the provider nor the issuer of the investments, but solely the internet service platform.

€ 3,349,500

Invested ( € 2.64M co-invested )

1004

Investors

2.44 %

Share Offered

Please note
The acquisition of this asset involves considerable risks and can lead to the complete loss of the assets used. The expected yield is not guaranteed and may turn out to be lower.
Contact Us
If you have any questions about investing on Companisto, please contact our service team:


Toll-free phone number for investors calling from Germany:
0800 - 100 267 0

Companisto investors hotline:
+49(0)30 - 346 491 493

We are available Monday through Friday between 9 a.m. – 7 p.m.

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