Travo Start-Up Summit: Early stage firms urged to consider 'agile' fundraising

Panel of experts at the half-day event hosted by News UK discussed new ways for start-ups to raise money, legal implications and approach to sustainability

An agile approach to fundraising is seeing early-stage firms bringing in more investment outside of formal rounds than within rounds, the Travolution Start-Up Summit heard.

The half-day event hosted by News UK saw a panel of experts in finding investment discuss the current climate for start-ups in the travel sector.

Anthony Rose, founder and chief executive of Seedlegals, said: “The trend we are seeing with early stage is companies saying I’m looking to raise £500,000 and then finding it very tough.

“Instead of raising a single round they are using advanced subscription agreement or convertible notes, we call it a seedfast to raise ahead of a future round or top up a last round. 

“That’s the rise of agile fundraising, people raising outside of a round rather than in a round and that’s more money raised outside of a round in early stage than in a round itself. That’s completely changed the way people fundraise.”

Rose advised start-ups to make as much noise as possible about what they are doing to attract the right angel investors who are looking to take advantage of tax breaks offered by the UK government for investments.

Kolvin Stone, partner at travel specialist law firm Fox Williams, said it is important that travel firms get the fundamentals right in terms of their legal foundation from the outset.

“Keep it simple,” he said, “at the early stage people tend to overcomplicate. The second thing is there used to be a strategy of we will build it, scale it and if we get into trouble we will ask for forgiveness. I think that model’s now gone. 

“Uber have been around for a long time now and are at a certain scale, but I think they are still struggling with some of the decisions they took at a much earlier stage. With travel it’s highly regulated. 

“A lot of the innovation and disruption we are seeing in travel relies on data and that is a regulated space and it’s becoming more regulated. We see some of the fines for misuse of customer data they are significant. 

“And also AI is becoming more prevalent and the European Union is looking to regulate that and have something like the charter on human rights. So it’s important to build in, right from the outset, compliance into your model and also your business.”

Charles Hardwick, principal at Vitruvian Partner, said sustainability is a “huge tailwind” for certain sub-verticals within travel when attracting backers.

“For almost every vertical there are folks innovating trying to and drive sustainable travel, partly driven by demand, partly driven by investor demand. That’s a tailwind irrespective of COVID, Irrespective of consumer spend is just not going to go away.”