German travel startup Tourlane raises $26 million led by Sequoia

Global travel continues to gain ground, and the World Travel and Tourism Council predicts the industry will too exceeding $11 trillion in revenue this year. Consumers are evolving from the so-called “revenge travel” of the post-Covid-19 years, spending a growing portion of their budgets on a wider range of outdoor experiences. Add AI to the mix and we now have renewed interest from investors in startups looking to disrupt the landscape with something new.

Riding the travel train, based in Berlin Tourlane – an agent-like platform that allows users to plan and budget for trips, bringing together flights, accommodations, activities and tickets – has raised new funding of €25 million ($26 million) in the hope of capitalizing on these trends.

The Series D, led by Sequoia Capital, is intended as a bridge to help the company reach profitability, Julian Weselek, CEO and co-founder of Tourlane, told TechCrunch. The startup will also use the money to expand its technology, double down on AI and potentially expand into more origination markets beyond its current bases in France and Germany.

The AI ​​investment can be the detail that catches the eye. Weselek said the company is introducing generative AI around the front end of the service to build more intuitive ways to help steer users towards options for what they want.

However, he said this will not mean a complete replacement of people. “Is it possible to build the technology to provide customers with a fully automated offering? Yes, it certainly can,” Weselek said. “I guess the question is, if you know your wedding depends on this next holiday, do you want to have a consultation with someone who has been in the country to sign off on the booking?”

Tourlane is also betting big on the back end, where AI will help evaluate the thousands of permutations of flights, accommodations, cars, activities, time of year and other variables to maximize users’ chances of getting what they want want – and Tourlane therefore also more income.

The company, Weselek said, has about 500 employees, including about 150 customer agents. He said that figure is “going down” as a “relative number” compared to the number of customers each agent helps. “They are becoming more and more efficient.”

Beyond AI, the question of scale is perhaps just as important for Tourlane. The startup, founded in 2015, is now almost ten years old and says it has booked trips for 100,000 people to date (each person in a booking counts as an individual).

It’s also serving more customers: Weselek said last year was five times stronger than last year before Covid-19 hit.

Still, 100,000 is not a large number, relatively speaking. Figures of the UN estimate that the number of travelers worldwide reached 790 million in the first seven months of 2024.

And it’s unclear what the payout for Tourlane is. Like traditional travel agencies, Tourlane makes a commission on the services it sells, but does not disclose how much. Instead, the company says compensation varies depending on various factors and partners.

Nevertheless, this is clearly a gamble that Sequoia Capital believes is worth taking. The venture capital firm is now Tourlane’s largest external investor.

“This is a unique moment in the history of travel. With AI, every traveler has the opportunity to see the world through personalized, tailored travel experiences,” said Andrew Reed, the Sequoia partner who led this investment, in a statement. “Tourlane is positioned to delight millions of travelers in the coming years.”

Sequoia is an interesting name to have on the list, given the success the legendary venture capital firm has had in travel to date. His previous investments include Airbnb (one of the early investors, Sequoia became one of the biggest winners when it went public), Skyscanner (one of Sequoia’s first investments in Europe, now part of Trip.com), Klook and Kayak (now part of Booking), along with many other smaller startups in the space.

Other investors participating in the Series D include Target Global (a new backer), Jared Smith (co-founder of Qualtrics) and HV Capital.

Tourlane doesn’t reveal its current valuation, but for context, the last time it raised money – a $20 million Series C expansion round – it had a valuation of $242 million, the same as what it was valued in the original Series C of $47 million. The first tranche of that Series C round closed just months before the pandemic hit, and the second closed in the middle, as Tourlane raised money to keep it going until people started traveling again.

Perhaps because of the rollercoaster Tourlane has experienced so far, or because the valuation is modest this time around as well, Weselek said he doesn’t see that number as a focus or priority.

“Business valuations in the private market are highly volatile and are heavily influenced by various external factors that we cannot control, such as the cost of capital, investment hype cycles and perceived risk levels,” he said. “What matters to us, right Now, is the fact that we have successfully secured €25 million in financing from world-class investors, allowing us to bridge the path to profitability while continuing to invest in our product, service and growth will generate a lot of shareholder value in the coming years.”