Tripeur, our portfolio company, recently announced its acquisition by the largest travel spend management company – TripActions (now Navan). Shashank and I have been fortunate enough to work directly with the founders – Thia and Sajit – during the most challenging times of the pandemic era. However, uncertain times make the best entrepreneurs & incredible companies. I personally had a huge amount of learnings working with the founders and the journey of the company.
This blog post is to reflect back on our 4 years of journey with the company and our small role in supporting them during the toughest times.
Those who don’t know about Tripeur: Tripeur is a corporate travel spending management company. The product helps corporates automate travel bookings, reduce Turn-Around-Time (TAT) and significantly improve the booking experience for corporate employees. The product also brings significant data and insights for the CFO function, which can help corporate optimise travel spending. Their strong integration with the supply side helps further bring travel costs down.
Our original investment thesis in the company: Thia and Sajit are amongst the top founders I have had the opportunity to work with. Not only are both coming from very strong professional experiences, but both also offer plenty of complementary skill sets, which is hard to have in founding teams. I can bet that Sajit’s deep understanding of travel and hospitality can impress anyone. Every time I spoke with him he brought so many unique insights into the industry but also his ability to convey them with passion and energy. This brought in strong tech and product experience but also a strong leadership skill set to navigate and operate his business. The ethics and value system that Thia brought in has been inspiring, and his various actions along the journey kept on building strong trust relationships with him.
Corporate travel spending management, the space in which Tripeur operates, is super exciting for us. It offered a significant blue ocean opportunity when it came to the consumerization of enterprises. Most of the corporations are served by travel agencies and the offerings are largely services in nature with limited tech-enablement. Very large corporations are served by very big and professionally managed travel agencies such as FCM Travel, Carlson Wagonlit, American Express etc. who tend to service customers who typically have INR 10m+ monthly travel spend. On the other hand, SMBs are able to get their needs serviced through OTAs (Online Travel Agencies) such as MakeMyTrip, Yatra etc. as SMBs don’t have complex travel policies and approval systems.
The mid-segment corporates are where Tripeur found its mojo. Top agencies are busy serving large customers and OTAs are not geared to deal with such businesses. Mid-segment is largely served by mom-and-pop travel agencies, which is where service qualities tumble. Tripeur had a very clear target market segment (what is called ICP) and value proposition for the segment.
Its competition, in principle, is not with other tech incumbents, but with small agencies. Within tech players in the space, they were amongst the top 3 players in India.
Tripeur’s Journey during the COVID phase: The first 6 months of our investment journey with the company had been phenomenal as they were growing at a 20%+ MoM growth rate. The company put together an enviable team with the funding round we participated in. They had 50+ team members at their peak.
And then Covid hit! A black swan event that no one predicted, and for a business that operates in travel space, it was devastating. While they were doing phenomenally well pre-Covid, their revenues literally became negative because of cancellations from the previous month’s travel bookings.
The company took some time to digest the fact that the COVID impact is longish than just a few months, and it took them a few months to reduce the burn. This led to the company being in danger of running out of cash, as the top line was significantly eroded for almost the whole of 2020. The company actually had an M&A offer from a leading travel agency, but shareholders including us felt that it was not a good offer.
Our role at Tripeur: We, at Pentathlon, were willing to walk the talk with founders and help them create an alternative path for the company. Firstly, we encourage companies to be in control of their own ship and reduce the burn so that the company can run its business like a boot-strapped company during uncertain times. We built a strong alignment with the founders that the company would be able to seek a far better outcome post-Covid than taking an exit then. Founder coaching and helping them think clearly was core to how we worked with them.
We led a bridge round for the company to help them navigate the Covid phase and carve out a chance to emerge as a survivor, and ultimately as a winner.
It was obviously tough for internal buy-in at Pentathlon. Our Investment Committee challenged us “Are we putting good money in-task to chase bad money?”. But we went back to our core thesis on the company when we originally invested and believed that as long as the founders remained committed we have an opportunity to take some exposure further.
Fortunately, the dice rolled as we predicted. Post the second Covid wave, the company displayed a strong comeback, and for a few months, it delivered 100%+ MoM growth, adding customers at a strong pace while beating its competition. The company became profitable and was doing revenues significantly higher than pre-Covid times with a team size that is 1/5th!
We made a further offer to invest in the company and double down our investment. While we were finalising the agreements, a global player in corporate travel spending management – Navan – made an attractive offer to acquire the company. Navan is a global leader in the space with over USD 1.2b of funding. The founders felt that it would be the best outcome for the company, and will give a better chance for the company to prosper – to which we obliged!
That marked an end to our eventful and successful journey with Tripeur. This is our first exit and we are proud of the key role we played during tough times. It was a great journey of grit and resilience for the founders, and we are proud of our relationship with them.
But let’s reflect on our key learnings around this experience. We have also requested founders to also share some of their learnings as founders, now that they have experienced the whole cycle – starting, scaling, turning it around and successfully securing an exit!
Key learnings as Founders – From Tripeur Founder’s desk
Believe in your vision and be persistent: When Covid struck, we went through an existential crisis and naturally had the question “Will travel come back, ever?” go through our mind. However, good sense prevailed, and we decided to double down on travel. We built differentiating features and made our product stand out in the market when travel bounced back. This helped us fly right out of the gate, take the market by storm and reach profitability within six months.
Don’t delay important decisions, particularly tougher ones: It is easy for someone to become a “deer caught in the headlights” – especially when a devastating event pulls the rug from under their feet. However, an entrepreneur needs to transition out of the shock and denial mode quickly and take tough decisions. In hindsight, when Covid struck, we should have cut costs and downsized deeper and sooner.
Don’t sell your company in bad times: During severe downturns, when an entrepreneur runs out of money and struggles to survive, it is so stressful that one would want to throw in the towel and shut the shop. However, it is the worst thing that one can do for their company – it destroys value and doesn’t serve any purpose. We came very close to selling the company for a pittance, and we are grateful to our key investors for steering us away from the potentially disastrous decision.
Focus on the Bottom Line: Many startups tend to focus on growth at any costs and ignore the basics such as unit economics and profitability. Such focus on “vanity metrics” can make the company look good for the outside world, but can drag it down in the longer run. When travel started coming back after Covid, we focused relentlessly on the basics – adding customers, unit economics and sustainable growth. Sure enough, we were profitable within six months!
Key learnings as an investor:
Eating your own dog food: Founders get advice from various sources including investors. They are being nudged in different directions and suggested what to do and what not. We believe that the value of advice is only meaningful and respected if you are willing to ‘walk the talk’ with the founders and help them carve out a path in the direction you advise. When you do that, you build long-lasting trust with founders.
Nurturing ties with founders: As VCs, we tend to treat founders amongst the broader basket of portfolios. Portfolios are bucketed by the size of the investment, how they are doing, and where they are headed. That is where VCs and Founders are conflicted – VCs like to see success at a portfolio level while founders want their own venture to succeed. It’s very important that our relationship with founders doesn’t get impacted by such motivations, and irrespective of where the founder stack up in the pecking order of the portfolio, we provide them with the required support and nurturing. That will ensure more success stories emerge from the portfolio.
Going against the grain: Startup investing is hard and there is a significant risk of losing the capital. So, picking investments based on strong fundamentals and a ground-up thesis becomes very important. The thesis on a specific opportunity not only allows you to make quality investment decisions but also helps in reviewing how the company is holding up on the thesis parameters while it is portfolio investment. Now, there could be short-term aspects that affect a company’s performance but if the company remains solid on the original thesis, one should be willing to further back the company. More importantly, the decision should not get fazed by what others choose to do.
As Charlie Munger greatly said, “If you are the crowd, then you can not, by definition, beat the crowd.”
Be the contrarian!
