Housetrip: How we got funded by the big 3 VCs
When my wife Junjun and I met, I never thought we would be the founders of a startup – especially not one that has attracted investment from the three largest VCs in Europe.
We were students at the Ecole Hoteliere de Lausanne, a hospitality management school in Switzerland, and on track for careers in high-end hotel management. But after an internship in London in 2007, everything changed.
During our internship, Junjun and I wanted a relaxing getaway – but we didn’t want to stay in a hotel. That’s when we discovered the world of holiday rentals.
LIVE LIKE A LOCAL – ON HOLIDAY
We loved the idea of a place of our own where we could live like a local and simply be free in our own home. We absolutely fell in love with this type of accommodation. However, what we didn’t like was the booking process. Every rental owner had a different set of requirements. Some wanted full payment up front by Western Union, others a deposit through people, others again to be sent a contract by fax at the time of booking, etc… In the end, we spent more time booking our rental then we did actually staying in the property!
The idea for HouseTrip came to us following this experience. What if we could use our backgrounds in hospitality management to design a website that made booking a holiday rental as easy as it is to book a hotel? Where payments would be secure for both Guests and Hosts and everything was streamlined to eliminate unnecessary time and financial wastage.
As soon as we received our diplomas in January 2009, we started working on the idea full time. I remember in that first year I used to think “this really ought to be the hardest time in the life of a startup, the first year when you really create everything”.
Now that I am CEO of a company with over 150 staff, I realize that it never actually gets any easier – priorities simply change and demands get more diverse.
Our very first investors were the people who most believed in us and our vision – our friends and a few business angels we had managed to convince. We started with about $230,000 in the bank which we used to design and build the first website.
Junjun and I divided tasks, working from our student apartment in Lausanne. She took care of the money and administration while I became the ‘face’ of the company dealing with investors, website development and recruiting holiday home owners.
In January 2010, we finally went live. The period from initial investment to ‘live’ date took about six months.
MEDIUM SIZED FISH IN A SMALL SWISS POND
Being based in Switzerland had both its advantages and disadvantages. We were a medium-sized fish in a small pond and attracted a lot of early buzz.
“To succeed we had to open an office elsewhere”
This buzz brought us to the attention of our first VC backer, Index Ventures – who were our first big investors. Neil Rimer of Index Ventures saw the potential we had to bring to the travel industry and gave us the next boost of investment to take us to the next level of development.
But he also gave us an important piece of advice – to succeed we had to open an office elsewhere. Access to developer talent is key to building a successful startup. And there are only two cities in Europe that have the volume of developer talent needed, namely Berlin and London.
As Index Ventures had an office in London, it made the most sense for us to be there – and so we arrived in February 2011 in a small Soho office. Being in London definitely had its advantages. Our growth exploded as we hired developers to improve our site and more people to run our operations. This required another move to larger facilities in Clerkenwell – in the heart of Tech City.
Our growth between November 2010 and November 2011 (when we officially launched in the UK) was 1000%, making us arguably one of the fastest-growing startups in Europe.
This is what attracted our next investor, Balderton Capital, to come to the table. And so in October 2011, we closed the deal on our Series B round of investment to the amount of $17M. Once again, a move was required – this time to a two-story property in London’s West End.
In October 2012, we announced the completion of $40M Series C funding with Accel Partners. This makes us the only company with investment from the three largest VCs in Europe.
I am regularly asked how we did it and I want to share with you my top three pieces of advice:
- Focus. As a startup you are time and resource constrained. If you do not focus in everything you do, you will be spread too thin and won’t manage to become good at doing anything.
- The only people who matter at the end of the day are your customers so if there is one thing you need to be obsessed about it, this is it. If you have satisfied customers, you have the start of a great company.
- If you want to have the ability to grow very fast, you need to be in a big market and you need to think early about very scalable acquisition methods that are profitable for your business.
Above all focus is by far the most important factor. If you need to become the best in the world at one very specific thing for your business, what should it be?