Concur’s Perfect Trip Fund

Exploring Concur’s Perfect Trip Fund

“The Perfect Business Trip is the one that gets the job done.”  Steve Singh, CEO, Concur

Steve Singh’s quest is the perfect business trip.  His solution is the Perfect Trip Fund.

In a video posted on Youtube on May 6th, Steve Singh,CEO, Concur Technologies, shared his vision for the Perfect Trip Fund (PTF): Fill in the gaps in business travel and close the loop on the perfect business trip.

Concur has spent the last twenty years solving the travel and expense pains felt by SMBs and enterprises.  I’d also argue that it was the first SaaS company to submit an S-1 filing to the SEC (in 1998).  Now, two decades later, the company has created the PTF to team up with entrepreneurs and strategically invest in promising startups within the travel industry.

Six months ago in November, 2012, Concur officially announced the launch of  a $150 million fund to be invested in technologies already leveraging the Concur Platform (powered by Concur’s T&E Cloud).  It seems that these types of companies would be given preferential treatment in the due diligence and subsequent funding process.

As an aside, the T&E Cloud is driven by Concur’s vision of a travel-centric future powered by technology that’s mobile, social, local, and personalized.  The three pieces of the T&E Cloud are The Perfect Business Trip, Open Booking, and the Concur Connect Platform.  The Perfect Business Trip anticipates and subsequently automates each booking of the traveler’s itinerary.  Individual preferences and travel history are stored in the T&E Cloud to create travel options accustomed to each individual.  The Open Booking Model was created to solve the increasing challenge of leakage in managed travel programs.  The T&E Cloud enables companies to optimize supplier agreements while still maintaining the control that they need over their travel spend.  The result is a fully integrated travel experience.  Concur Connect enables customers, suppliers, and solution providers to access and extend applications and T&E data through Concur.  I envision Connect as the oil that keeps the Perfect Trip initiative and the Open Booking Model humming smoothly.

Anyways, where has the PTF invested this $150 million?

The PTF can be found on the captables of seven emerging technology companies.  Managers have stayed true to form by investing only in companies serving the travel space exclusively.  Dealmaking seems to be technology and region agnostic, from SaaS (Buuteeq), to mobile (Evature), to emerging market consumer internet (Cleartrip).  The company’s bet on data & analytics is present in the Nor1 deal.  Also, investments in Buuteeq, Nor1, Room 77, and Yapta hint that the managers seem to be leaning towards solving problems in the hotel space over car rental, flight booking, and cruise solutions.

Six of the seven Perfect Trip Fund companies raised significant VC money before joining the portfolio.  Buuteeq, a SaaS marketing platform for hotel operators, raised $6.7 million in angel and A rounds before Madrona and Concur invested $10 million.  Cleartrip, a complete booking solution focused on the South Asian traveler, raised $11 million before Concur put in $40 million in the Series C.  Evature, an Israeli-based free-text travel search for mobile and web sites, is the lone exception with $2 million of angel money all from Concur.  Nor1 raised $9 million from the fund after a <$6 million Series A with Accel and Goldman Sachs.  RideCharge already raised Series A money before the fund joined in the B round.  Room 77 and Yapta each raised Series A before the Perfect Trip Fund joined in the Series B and Series C, respectively.

According to the modeling in the Perfect Trip Fund Reserves Analysis below, the fund has already invested $54m to $75m of its fund. (1)  If we add-in “Reserve Capital Pile-On” and “Deals Under Consideration,” then the amount of invested dollars invested grows from $67m to $92m. (2)  That leaves $55.4m to $80.3m still to be invested. (3)

What does all this mean to you, Mr. / Ms. Startup CEO?  Just having an idea and a minimum viable product will likely not get you in the door at PFT headquarters.  If you’re still passionate about being a part of the family, then I suggest that you think about the following:

1. Raise at least an Angel and Series A round of capital from a premier VC
2. Develop a product suite centered on solving pains in the hotel space exclusively
3. History of significant traction and integration into the T&E Cloud

For now, the PFT is investing more along the lines of a growth-focused technology investor.  It is not an incubator…at least not yet.

Notes on (1), (2), and (3)

The Perfect Trip Fund’s Reserve Analysis assumes that:

1. Deployable capital is ~$147.5 million, assuming ~$2.5 million in management fees and expenses.  It’s unlikely that Concur has a full-time deal team assigned entirely to this initiative, so the traditional 2.5% management fee wouldn’t apply here.  It’s possible then that the work of sourcing, diligencing, and closing resides within the corporate development function of the company.  So, I assumed .25% collected over 6.5 years in management fees and expenses to cover fund related costs, such as marketing campaigns, legal fees, and third party portfolio valuation initiatives.
2. Minimum dollars allocated to new deals are $500,000.
3. Three scenarios – Minimum, Mid-case, Exceed – for Dollars Invested to date.  These 3 scenarios were applied to all deals other than ClearTrip, Evature, and Nor1 (whose deal contributions are posted publicly).
4. Reserve Assumptions Follow-on assumes that Concur has assigned <$5 million per deal to pile-on to current investments.
5. Sarah Perez’s November Tech Crunch article encouraged me to assume that PFT has a healthy deal pipeline; hence, the Deals Under Consideration section.  These deals – Lemon, Limos.com, Visage Mobile, Tango Card – reside within the PFT’s wheelhouse, as they are already active partners in the T&E Cloud and all have raised VC money.