1Mby1M Virtual Accelerator Investor Forum: With Hussein Kanji of Hoxton Ventures (Part 3)

Sramana Mitra: You mentioned a travel company out of Vienna. Vienna isn’t exactly the hotbed of startups in Europe. What is the genesis of this company and how did this come about?

Hussein Kanji: It’s even more colorful. The two founders of the business are Australian, one of who moved to Vienna and married a local girl. They came from the tour space. If you ever want to go on safari in Africa, the way you’ll do that is you’ll Google “safari in Africa”. Most of the folks who provide tours are few bigger companies. It’s mostly boutique operators and there are hundreds of these doing all kinds of things. Nobody has taken up all that inventory and put it into one centralized database. That’s what they did.

It took them about two years to get all these tour operators onto the platform, but they’ve now gotten hundreds of these tours operators. I think they have about 20,000 tours in our database. The company is called TourRadar. It’s doing incredibly well. The revenues have gone up almost 20 fold from the time we invested. These tours are great businesses. It’s the last part of travel that has gone online. Tours is a $50 billion market – most of which is done over the phone.

There’s a lot of value for a customer in this business. When you’re booking one of these tours, you don’t want to give a deposit of 25% to 30% to a tour operator that you’ve never gone on a trip with before and hope the person is going to be there. There’s a safety in terms of booking on a platform like this where you’re trusting the platform.

The way we found about this company was, one of our colleagues who was a Facebook executive and was living in London had gone to Vienna for a conference. He had bumped into these guys and had become very excited about this company. He was a venture partner at a New York venture fund called Betaworks. He tried to get Betaworks to seed this investment, but Betaworks doesn’t do deals in Europe. So, he called us up.

We booked a flight to Vienna pretty much the next day. We spent some time with them. It turns out it was a really interesting business and we wrote the check. He ended up joining the White House and became the Chief Product Officer.

Sramana Mitra: Very interesting story. Switching gears a bit, I would like to talk a bit about the trends that you are seeing in your deal flow. You’ve been in business for about four years. How many deals do you see in a given year from your various sources?

Hussein Kanji: We probably see about 1,500 to 2,000 investments but that’s a not a very good number from our perspective. We’re only really interested in the companies that are going to become these blockbuster type of companies. Most of what we see doesn’t fall into that camp. For the one to three blockbusters that are born every year in Europe, there are probably 10 or 20 potentials. We monitor that number much more than we monitor the bigger number.

Sramana Mitra: The question that I was getting at through that number is what are the trends that you’re seeing? What is Europe getting good at? What kind of companies are being formed in Europe?

Hussein Kanji: There is a ton more stuff. The market has matured. People are much more comfortable building companies than they ever were before. We’ve seen tons of stuff in FinTech. The reason for this is the UK banking regulator has made it easy for people to build next-generation banks in the UK. The amount of money you need to put in to get the license is significantly reduced. There’s a bunch of next-generations banks.

There’s a bunch of next-generation payments companies taking advantage of the fact that the banks charge very high FX fees when you’re moving money from one country to another. Then the rest of it is pretty fragmented. Everything that you would see in Silicon Valley, we’re seeing as well. It’s just that we may not see the same density. Instead of seeing 20 companies in the same space, we may see two companies.

What we found is most of the good ideas are global ideas. When people discover them in California, there’s a really good chance that they may get discovered in Europe as well. We’re seeing interesting infrastructure companies dealing with containers. We’re seeing interesting B2B companies in all kinds of spaces. It’s a very active SaaS.

There’s tons of HR technology companies. We’re trying to help blue collar workers, for instance, get jobs as opposed to white collar workers. Blue collar workers have smartphones now, so maybe there’s a better way. We’re seeing tons of diversity. It’s random. We never know when our next deal is going to be or what space it’s going to come from. It’s just very hard for us to predict that.

This segment is part 3 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Hussein Kanji of Hoxton Ventures
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