Closely watched travel-data startup Journera raises another $10 million from big-name venture firms — and claims it can be profitable by next year. In a very different deal, an Alaskan airline is raising money online to fund expansion to Asia. Will it work? Since no major airline has tried it, it’s hard to say.
Journera Chief Executive Jeffrey Katz has big news and a bolder prediction to share this week. The news: The closely watched travel data-sharing company raised another $10 million in a Series B-1 round from blue-chip venture capital firms led by B Capital and including new investor Par Capital, Boston Consulting Group and Andreessen Horowitz. That brings the six-year old company’s total venture capital to $30.6 million. The not-quite-promise: Journera will turn profitable in 2023.
“Profitability is on the horizon for us, as soon as next year if we keep costs low,” said Katz, a former chief executive of online travel agency Orbitz. “The market is collapsing, and we just closed a round.”
The Chicago company connects different travel providers, sharing encrypted data about customers to help smooth their journeys, Katz said. Much of its promise is about solving problems that result from things like flights that arrive early or late, alerting hotels and ground transportation companies that their clients’ plans have changed. Data can also be used to offer upgrades and other services, he said.
The idea has intrigued the industry ever since Skift put Journera on its list of travel companies to watch back in 2018. In a way, it plays on the popularity of cloud computing and customer relationship management companies, which help clients in many industries handle data more cheaply and flexibly. They include Amazon.com, whose Amazon Web Services cloud-computing unit Katz credits with helping Journera hold down its own costs. Those stocks soared for years before being hit hard by the decline in technology shares since the fall of 2021.
But Journera has also drawn skepticism from players who argue that airlines and hotels have been wary of sharing data, wondering how a startup would convince them to help Journera build better products than travel agents have offered. And they questioned whether Journera, which touts partnerships with major hotel chains like Marriott, Hyatt and Hilton, had made the inroads among independent hoteliers it will need for growth.
But the Covid pandemic has made once “fat and happy” customers more nimble, and more receptive to new ideas, Katz said, without sharing details of revenue and growth. In particular, he said, hotels are looking to technology to deal with labor shortages caused by the pandemic.
“You see them with more demand growth than they can keep up with,” Katz said. “They’re forced to innovate to keep up.”
Would You Like to Buy an Airline?
Stop us if you’ve heard this one before, because we haven’t: A U.S. airline is raising capital to expand into Asia using Internet crowdfunding.
The airline is Northern Pacific Airways, based in Anchorage, Alaska, and it’s looking for $5 million to grow from a regional carrier in Alaska to connecting Korea and Japan with cities in the lower 48 U.S. states plus Alaska, which it hopes to do by the fall of 2022. Small investors can get in on the action with bets as small as $100. The offering is set to open June 8, though information on the deal is available now.
The company says it did $55 million in 2021 revenue on flights within Alaska, after its current investors took over a bankrupt regional airline in 2020, and will do $90 million this year. It is asking for money based on a pre-deal valuation of $280 million.
The idea is to mimic the success of Icelandair, which uses Reykjavik as a hub for shuttling between U.S. cities and Europe, with its flights converging on a hub in Iceland. Icelandair had $158.7 million in operating revenue in the first quarter of 2022, beginning to rebound after its business was whipsawed by travel regulations inspired by the Covid pandemic.
“If they have thousands of Alaskans and future customers who are owners, they’re probably more likely to fly Northern Pacific than United or Cathay Pacific, said Johnny Price, vice president for fundraising at WeFunder Inc., a San Francisco-based company that is coordinating the offering.
Northern Pacific will also be raising money from professional investors, WeFunder spokeswoman Kelsey Grady said, but wanted to give small fry a chance to buy in at a lower valuation first. The larger fundraising effort, due by the end of the year, will include venture capital firms, angel investors and institutional players, she said. Proceeds will be used primarily to buy planes.
Vacation lodging startup Evolve raised $100 million in a similar hybrid deal of institutional and consumer money in February. But capital-intensive airlines carry a high risk of loss if the economy sours, and their stocks are considered highly cyclical.
Northern Pacific’s deal is enabled by a 2021 change in securities regulations that let crowdfunding promoters raise as much as $5 million from small investors without meeting the full array of federal stock registration rules for bigger offerings, Price said. The corporate crowdfunding market has quintupled to $500 million raised last year, from $100 million in 2019, when companies could only raise $1.07 million each, Price said. But no U.S. airline is believed to have raised money this way.
Northern Pacific hopes to have 50 planes, $1.3 billion in revenue and $120 million in annual profit by 2026, according to its offering circular, which notes that the results are not guaranteed. In conventional securities offerings, companies don’t include such projections lest they be interpreted as statements of fact subject to strict legal liability for misstatements.
Skift Cheat Sheet
Seed capital is money used to start a business, often led by angel investors and friends or family.
Series A financing is typically drawn from venture capitalists. The round aims to help a startup’s founders make sure that their product is something that customers truly want to buy.
Series B financing is mainly about venture capitalist firms helping a company grow faster. These fundraising rounds can assist in recruiting skilled workers and developing cost-effective marketing.
Series C financing is ordinarily about helping a company expand, such as through acquisitions. In addition to VCs, hedge funds, investment banks, and private equity firms often participate.
Series D, E, and, beyond These mainly mature businesses and the funding round may help a company prepare to go public or be acquired. A variety of types of private investors might participate.