Analysis of travel startup funding and merger and acquisition trends in the second quarter of 2025

The second quarter of 2025 saw a decline in funding for travel startups compared to the lackluster numbers from the first quarter. Only about $800 million was invested in travel startups during this period, as reported by Phocuswright’s Travel Startups Interactive Database. This decrease in funding could be attributed to the prevailing global economic uncertainty, political tensions, and tariffs, which may have led to a hesitation in investments within the travel industry. If this downward trend continues, the total funding for travel startups by the end of 2025 is projected to be around $4 billion, a significant decrease from the $5.5 billion invested in 2024 and a far cry from the record $16 billion in 2021.

Several travel technology companies managed to secure substantial funding rounds during the second quarter of 2025. Notable rounds included Ramp with $200 million, Canary Technologies with $80 million, Fora with $60 million, Holidu with €46 million, and Onfly with $40 million. One outlier was Tern, which received $13 million in Series A funding in May. Other startups that attracted investments in this quarter included Kolet with $10 million, Chatlyn with €8 million, and Unravel with $7 million in Series A funding. However, most rounds stayed below the $10 million mark.

A global survey conducted at Phocuswright Europe last month revealed that about two-thirds of travel entrepreneurs perceive the funding climate to be either very difficult or somewhat difficult. Looking back at the second quarter of 2024, there were more headline-grabbing funding rounds, potentially due to factors like global economic instability and uncertainty surrounding artificial intelligence (AI). The rapid advancement of AI-driven tools in the travel industry could be prompting investors to be more selective in their investments, particularly in startups utilizing AI technologies.

Despite the challenging funding climate for travel startups, there is optimism among top travel tech investors regarding future funding prospects. According to Gaurav Tuli, a partner at F-Prime Capital, the market has matured, capital is becoming more travel-literate, and travel tech has evolved from a niche category to a full-blown sector. While startups might find it challenging to attract pre-seed and seed investments, there are still opportunities for funding, as evidenced by recent investments in companies like Juno, Travaras, and Airial Travel.

In terms of mergers and acquisitions (M&A) activity in the travel startup space, there was not a significant flurry of activity in the second quarter of 2025. However, Kinnevik reported promising signs of increased M&A activity in its Q2 earnings, indicating potential public listings on the horizon. Some notable acquisitions during this period included Marriott’s purchase of CitizenM for $355 million, Sabre’s sale of its hospitality business unit to TPG for $1.1 billion, and JetBlue Airways divesting JetBlue Ventures to SKY Leasing. Other deals such as Lighthouse acquiring The Hotels Network and Duetto buying HotStats also took place in the industry.

Although there have been rumors of several travel IPOs in the pipeline, Navan is the only company that has officially confirmed its plans. The lack of funding for travel startups and the limited number of exits were topics of discussion in a recent interview with Nick Cocks, founder of Velocity Ventures, where he highlighted the current risk-averse environment and challenges with IPOs. Despite the hurdles, there remains a sense of optimism among investors at all stages about the future of funding in the travel tech industry.