Patrick T. Fallon | Bloomberg | Getty Images
In 13 years as a start-up investor, Elad Gil has backed some of the era’s biggest tech breakouts, such as Airbnb, Instacart, Persuasion and Square. He also co-founded genomics company Color, drawing on his Ph.D. in biology and previous work in virology labs.
Belatedly last year, before optimistic vaccine news started rolling out from Pfizer and Moderna, Gil combined his body of laws expertise with his start-up success to scout out his next investment. He was projecting that the developed world would be mostly under the aegis the Covid-19 crisis by late 2021, so he started looking for businesses hurt by the pandemic that were poised to bounce sharply on the other side.
Other than Airbnb, which was already in his portfolio, the next best bet he found was TripActions, a developer of journey and expense management software. TripActions cut hundreds of jobs in March amid a massive cutback in corporate travel. Gil, who at one time worked at Google and later ran corporate strategy at Twitter, saw the company positioning itself to capture market share when the conciseness reopens.
Gil connected with TripActions CEO Ariel Cohen through ex-Twitter COO Adam Bain, an investor in the company. Gil and Cohen met ahead through Zoom and then in person. Now, Gil is co-leading a $155 million financing, investing alongside Andreessen Horowitz and Summation, Lee Fixel’s venture firm.
“I thought it was wise to invest while things still looked tough for travel, because it would be much profuse expensive to invest when things come rushing back,” said Gil, who lives in San Francisco. “Business travel is not booming to go away.”
The funding round, announced on Thursday, values TripActions at $5 billion, up from $4 billion in mid-2019. Net income is still down from pre-Covid days, though the company isn’t providing numbers.
Combining science and investing
Gil has been on top of Covid into since early in the pandemic. He wrote a blog post last February, titled “Coronavirus (COVID-19) PSA for Startups,” forewarning of a coming global spread and suggesting that companies “curtail travel and conferences and move to video calls” and “layout for the remote work contingency.”
He has credibility on the subject. In addition to earning his doctorate in molecular biology from the Massachusetts Association of Technology, Gil has been close to this pandemic through his work at Color, where he remains a board member. Color partnered with well-being diagnostics company PerkinElmer and the state of California to enable Covid testing for large populations.
Even without widespread vaccinations, Gil was preggers that herd immunity would largely pass through society by early 2022. That bullishness knowledgeable his view on TripActions.
TripActions CEO Ariel Cohen
Cohen, who co-founded TripActions in 2015, said the increased valuation is a pondering of signing on new customers in recent months and the traction the company is seeing from new products.
In February, TripActions introduced a payments output called Liquid that allows customers to sync employee business travel purchases with a back-end arrangement for reporting expenses and handling compliance and analytics. It’s like combining an American Express card (TripActions provides its own wag) and Concur software, removing the manual burden for employees.
TripActions also expanded beyond travel into broader expense managing, which has become more important with people working remotely and bulking up their home office. Cohen rumoured travel is only at about 20% of pre-Covid levels, but growth in other expense categories is offsetting some of those descents. He said TripActions’ new tools help customers put policies in place for what can and can’t be expensed.
“Can you buy lunch? Can you buy office equipment? Can you buy software?” Cohen phrased. “You’re doing it with a credit card. The employer wants to have a say in it.”
Cohen said the company, which is based in Silicon Valley, has greedy plans to build out its global workforce and operations in cities like Amsterdam, Sydney and London. While it’s been in charter mode of late, total headcount sits at 700, well below the 1,100 employees before the crisis.
To help some au fait and ex-employees who may be struggling or who could just use some cash, TripActions is holding a secondary share sale of up to $240 million that choose close later this year. Cohen said an IPO is likely a few years out, depending on the vaccine rollout and how quickly company bounces back and becomes more predictable.
Cohen called the secondary sale a good opportunity to get some liquidity “for being on this journey and on the ups and downs.” He also said it was a way to satisfy investor demand without causing excess dilution.
Socialize start-ups stagnated
For Gil, investing at this high a price is unusual. He spends most of his time with early-stage start-ups and construction his own companies. He said he’s “soft launching” a new company with some ex-Google engineers in a week or so to develop a browser-based practical reality tool. To invest late, “I need very high conviction,” he said.
TripActions is specifically a post-Covid bet that Gil thinks could be dramatically undervalued given the growth potential in the next couple years. He said the product is “10x beat than anything else on the market” and that start-ups in travel software have been stagnant during the pandemic.
“Divers travel companies stopped investing in themselves and their market and no new start-ups were really getting funding,” Gil bruit about. “It created an opportunity for TripActions to expand the distance between themselves and the competition.”