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Travelguru Valued At $12 Million?

18 August, 2009

The Travelocity-Travelguru deal marks the first sign of consolidation in the heavily venture-backed online travel agent (OTA) space in India. Besides Travelguru, other major venture capital backed OTAs are Makemytrip, Yatra and Cleartrip. Though the valuation for the Travelocity’s acquisition of Travelguru is not disclosed, VCCircle has learned from sources that the hotel aggregator could be valued between $10-12 million. An email sent to Ashwin Damera, CEO & Co-founder, Travelguru, to verify this information, did not elicit a response till this article was published.

Travelguru is believed to have recorded revenues of Rs 10 crore for fiscal year ending March, 2009. Travelguru has been looking for a buyer since last year. Last year, VCCircle had reported that Travelguru was in talks to sell out to Travelocity’s rival Expedia. The talks didn’t materialise into a transaction then.

The VC investors in Travelguru would have lost money on the deal. Venture capital firm’s Sequoia Capital India and Battery Ventures committed $25 million in two rounds of funding to Travelguru. The total amount of funding that actually flowed into the company is not known. Though investors in Travelguru would have preferred a stock deal, Travelocity is believed to have insisted on an all-cash deal.

The promoters of Travelguru – Ashwin Damera and Amit Taneja (founder of Desiya, which was acquired by Travelguru in December 2007) – are believed to have got $1 million each as part of the deal.

What does the deal bring to Travelocity? The deal would give Travelocity a base in India mainly in the hotels aggregation space. Travelguru does not do much of air travel booking. Travelocity is present in India since 2007. The company had said at that time that it would look to acquire an Indian OTA player.

Travelocity is owned Sabre Holdings, an American travel technology company with several brands in travel agency, airline, and direct to consumer business. In December 2006, private-equity firms TPG Capital and Silver Lake Partners acquired Sabre Holdings Corp and delisted the firm from New York Stock Exchange.

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anonymous . 6 years ago

Great work by Ashwin. Proud of you to have taken the entrepreneurial route and motivated many others alongside you.

S . 6 years ago

If Travelguru has got a total funding of $ 25 Millions & they sold it for a valuation of $ 12 Million, then all the best to other OTAs!

anonymous . 6 years ago

that is a really low valuation to sell at assuming that all of VC money promised was actually pumped in. If indeed this is correct price, then either its a VC forced distress sale or the inherent value in the business was very low.

Rajesh Khanna . 6 years ago

Everyone in the industry knows the VCs have lost money… But then, the recession in the Travel industry has hit the players so badly (most airlines are in the red big time for example), that 10-12mn$ is a superb price for Tguru… Hats off to Ashwin. Lets praise the guy for starting an enterprise from scratch. Its high time Indians applaud entrepreneurs regardless of profitability as this is what made US tick.

PCK . 6 years ago

So..this reduces the chances of exit for the other guys…isn’t that one reason why a middle-large player like Travelguru would jump at an exit…

shoban . 6 years ago

this deal just doesnt make sense. last year VC Circle said Expedia bought them for $70M. if their current revenues are $2.5M thats 30x which is absurd even in a bull market. At best it would have been a 10x-15x of revenues.

Im guessing revenues are more like $7-8M and deal size of 5x-7x which means $40M+.

cant see why investors would sell otherwise?

Vivek . 6 years ago

I think VC investments are by definition high risk, high rewards. They expect no more than 1-in-5 investments to given them extra-ordinary returns and some investments to even get totally written off; so even a sell-off that brings in 50% of their investment is not bad – given whether you look at this deal as one of the 4-in-5 dud investment or that 1-in-5 star investment.

NLS . 6 years ago

This transaction should demonstrate to VCs and entreprenuers alike – mass market consumer internet in India requires staying invested for the long haul. You have to stay in it for 7-10 years for your investments to yield venture returns. Anything short of that period and you’ll be lucky to get your money back. The fact is that even now, three years after its advent, Indian online travel is still in its infancy. You cannot build a large scale business, and thus command massive valuations, in just three or four years as the market is still small, fragmented and immature. Much more product innovation and new channels to market have to be developed for an ‘OTA’ (I like to think of them as new gen TAs) to address the Indian mass market for travel. Until then, there is only a relatively small online market to address. There is only so much you can achieve with a fancy website and some inventory in such a short time.

All in all, a commendable effort by the TravelGuru team. They stuck to their strategy and now are part of a larger organization which will, hopefully, have the patience and the conviction to back them the rest of the way.

Vishal . 6 years ago

Mark my words – this is the just the beginning of what will be a long list of losses for Sequoia. They have been spraying money all over the place at ludicruous valuations. I know this because I am an investment banker and Sequoia is the ultimate banker’s delight. Show them a deal they even mildly are interested in and they come in at any price and complete the deal in lesser time than what other PE/VCs take to even send in their first EOIs. Afterall, it has to come and bite them back at some point.

Prasad . 6 years ago

I worked with travelguru in 06 – 07 – they have done very good work to build their brand in online space.but looking at vlaue which they had sold “i am confused”,last to last year they had aquired desiya for 100 cr. Boss .. its big amount.now they themself sold to travelocity for only 12 mn $.this means all amounts are false but fine is all ok there then good.

but still confused…

dinesh . 6 years ago

I am not sure if this valuation and news is correct. even if correct there are chances that the valuations declared might be less then the actual to avoid taxes.

But i do not think travelguru had great list of hotels and prices anyway for it being to be valued..even at 3 times this valuation its investors would not make any money.

Travelguru Valued At $12 Million?

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