Fundraising values Skyscanner at $1.6bn
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Skyscanner has received nearly $192m from new investors, in a move that sees the Edinburgh-based online travel site enter the small club of British ‘unicorns’ — private technology companies worth more than $1bn.
Skyscanner will use the investment to fund acquisitions, expand internationally and fend off takeover offers from larger rivals in the fiercely competitive sector.
The fundraising round makes Skyscanner one of the UK’s most highly valued technology start-ups at a time when they are generating more investment than at any time since the end of the dotcom boom in the early 2000s.
People familiar with the matter said the investment values Skyscanner at about $1.6bn, doubling its valuation since Sequoia Capital, the Silicon Valley venture capital firm, took a stake in the company in October 2013.
Gareth Williams, chief executive and co-founder, told the Financial Times, that in addition to pursuing deals the investment will also provide “a measure of liquidity” to existing shareholders. He said a number of investors will sell parts of their current shareholdings without fully exiting their positions with the company.
“We’re fundamentally a profitable company with organic growth,” he said. “We’re in a $500bn sector globally, so wanted to make sure we have the funds to accelerate growth.”
The company said it raised money through “primary and secondary investments”, with a group of five investors taking undisclosed stakes. These included: Artemis, the UK-based fund manager; Baillie Gifford, the Edinburgh-based investment group; Khazanah Nasional Berhad, the strategic investment fund of the Malaysian government; Vitruvian Partners, a European investment group; and Yahoo! Japan, the Asian online portal that already runs a joint venture with Skyscanner in its home country.
Skyscanner has been looking to international expansion as a path to overcome slowing revenue growth. As well as its Japanese joint venture, it acquired Youbibi, a Chinese travel search company, in 2013.
According to its most recent financial filing, the company’s 2014 revenues rose 42 per cent year on year to £93m, but this represented a slowdown from the doubling of turnover recorded in 2013.
Skyscanner has 50m monthly users, but faces intense competition from the likes of Priceline’s Kayak, a rival travel comparison site, Chinese site Qunar and Google.
Founded in 2003 by Mr Williams, Bonamy Grimes and Barry Smith, the trio met on their first day of studying mathematics and computing at the University of Manchester.
Following graduation, Mr Williams came up with the concept of a single site to search and book flights, after struggling to find the best flights through traditional travel agents.
Once a prototype was built and began to be used by thousands, the three men concentrated on the project full time and opened offices in Edinburgh.
The company now has offices in the UK, Singapore, Beijing, Shenzhen, Miami, Barcelona, Sofia and Budapest.
The UK has produced 17 other ‘unicorns’ in recent years, compared to more than 140 worldwide, according to research from GP Bullhound, the investment bank. Scotland is a rare outpost for tech companies, with FanDuel, the fantasy sports website, the only other unicorn based in the country’s capital.
British start-ups to join this elite group in the past 12 months include: Farfetch, the luxury online clothing retailer, Shazam, the music discover app, and Funding Circle, the peer-to-peer lender.
However, analysts have said in recent weeks that there are signs of changing investor sentiment towards tech groups worldwide. Some Silicon Valley start-ups have struggled to raise money because of growing scepticism over whether these groups can justify their high valuations.
Comments