Headout Raises $12M to Fuel Growth in Domestic Travel

Headout's Remarkable Recovery in the Travel Sector

The pandemic significantly impacted the travel industry, and Headout, a startup operating within this sector, faced substantial challenges. Launched in 2015, the platform facilitated same-day bookings for tours, events, and activities globally.

Significant Growth Post-Pandemic

However, the company is now experiencing a resurgence in growth, fueled by the recovery of domestic travel. Headout reports an impressive 800% increase in business since January 2021.

New Funding Round

Today, Headout announced a $12 million funding round led by Glade Brook Capital, a firm with prior investments in prominent marketplaces such as Airbnb, Meituan, Uber, and Instacart. Existing investors – Version One Ventures, Nexus Venture Partners, FJ Labs, 500 Startups, Haystack, and Ludlow Ventures – also participated.

New investors, Espresso Capital and Practical VC, joined the round as well.

Achieving Profitability and Expansion Plans

Headout achieved profitable EBITDA (earnings before interest, taxes, depreciation, and amortization) in July. The newly acquired funds will be allocated to expansion into 300 cities, further product development, and strengthening its teams across product, business, marketing, and operations.

The company intends to hire over 150 new employees globally and is actively seeking opportunities for acqui-hiring within the travel and entertainment startup landscape.

From Crisis to Opportunity

This turnaround marks a dramatic shift from the initial stages of the pandemic. According to co-founder and CEO Varun Khona, the company’s revenue plummeted from over $250 million to virtually nothing within weeks.

Identifying Key Trends

As travel began to resume, Headout identified two significant trends. The first was an unprecedented surge in domestic travel demand. The second was the increasing number of travel experience providers embracing digitization for the first time.

The company strategically shifted its focus to domestic tourism in the final quarter of 2020. Demand is currently strongest in regions with high vaccination rates, including the United States, the United Kingdom, the European Union, and the United Arab Emirates.

Focus on Local Experiences

“To succeed in this evolving market, we prioritized onboarding a wider range of experiences – those that are more diverse, local, and specialized – to appeal to domestic travelers,” Khona explained. “We standardized services offered by these smaller, independent providers, enhanced their offerings, and brought them online.”

Furthermore, Headout invested in providing the platform in local languages, going beyond simple machine translation to ensure content is both compelling and inspiring. For instance, 85% of bookings in Spain are completed in Spanish.

Differentiation Through Quality Control

When discussing Headout’s competitive advantage, Khona noted the company’s evolution in 2018. It transitioned from a traditional listings-based marketplace, similar to Booking.com, to a “more managed marketplace.” This involved standardizing, upgrading, and branding experiences to guarantee consistent quality.

This approach led to increased conversion rates, which in turn “enabled us to generate more sales for our partners and consequently secure a higher commission,” resulting in profitable unit economics.