Over the past decade, global venture capital (VC) funding has grown at an average annual rate of more than 20%, peaking at $322bn in 2018, and reaching almost $300bn in 2019. This deep pool of liquidity for early-stage companies has enabled them to expand across borders in search of new customers and talent.

California-based TripActions, a business travel management platform, epitomises this potential to scale up. Since being founded in 2015, TripActions has raised a total $481.5m over seven funding rounds, and was valued at $4bn in its $250m series D round in June 2019. Its entry into the so-called ‘unicorn’ club, or private companies valued at $1bn or more, is considered a hallmark of success in Silicon Valley, where it is based.

Charging unicorn

TripActions co-founder and CEO Ariel Cohen claims its success has been driven by creating value for both business travel users of the platform and the people in charge of companies’ travel budgets, such as chief financial officers. “With these two things together, VCs will want to put money into this, and we can go and scale as fast as you can,” says Mr Cohen.

Fuelled by VC funding, the company has grown rapidly to more than 1000 employees across nine offices globally. TripActions’ revenues have grown at 400% year on year, and it currently manages more than $2bn in annual travel budget across over 3000 enterprises worldwide. 

“The main thing VCs can help [start-ups] with is their experience of past success and giving you the right advice,” says Mr Cohen, who says VC has enabled TripActions to scale internationally through advice and capital (see venture capital feature on page 18).

Tactical presence

With significant capital to play with, start-ups must grow strategically to ensure any investment is used as efficiently as possible. TripActions’ international expansion strategy focuses primarily on where the firm needs to have a presence to support its growing base of customers and their travelling employees. “Having teams in-region helps to ensure we understand the regional landscape and local nuisances of business travel,” says Mr Cohen. 

In 2020, the company plans to double its headcount in Europe, where business travellers rely more heavily on rail than in the US. Mr Cohen adds that to discern and serve differing customer needs, teams need local cultural knowledge and awareness of the markets they serve. 

“We usually have our R&D people based in locations that we believe will have customers, so that they can really understand the product. If you’re not there with [users] R&D-wise, support-wise and sales-wise, it would be very hard to meet their needs,” he says. 

Compliance and carbon

Amid a backdrop of data regulations, such as GDPR in Europe and the recently enacted CCPA in California, software companies must navigate the regulatory environment to avoid potential pitfalls. Mr Cohen says TripActions has signed agreements with business customers to use their data purely to optimise its services.

Similarly with climate change, businesses must implement effective environmental practices, and he says the need to offer carbon offsetting to business travellers is fundamental. “In a lot of ways, we see it in the same way as wellness of the employees.” 

Despite these possible challenges, the record levels of VC funding for start-ups – together with the potential rewards of shaking up significant markets – is likely to spur the continuing expansion of software firms such as TripActions.