New – Channel 4 invests £1m in TravelLocal
The Channel 4 Commercial Growth Fund – the investment arm of the TV broadcaster – has just completed a £1m investment in TravelLocal in an airtime-for-equity arrangement.
Channel 4 has invested alongside Wealth Club investors at the same share price and in the same share class.
Channel 4 is the latest institutional investor to back the business, after Active Partners and Gresham House Ventures (through the Baronsmead VCTs).
TravelLocal is a global online marketplace for tailor-made holidays. It makes it easy for travellers to connect with vetted local travel experts in 49 destinations worldwide. It creates personalised holidays directly for and with the customer.
It was founded by two former Audley Travel executives and has been backed by institutional investors, including the two Baronsmead VCTs. Since launch in 2016, it has generated booking revenues of £5.8 million.
Now, TravelLocal is raising £1.5 million under EIS to support its future growth. It targets investment case returns of 6x before tax relief (8x after) – high risk and not guaranteed.
- Rapidly growing business
- Addressable market worth up to £30 billion and growing at 7% per annum
- Invest alongside three institutional investors: Baronsmead VCTs, Active Partners and Channel 4 Commercial Growth Fund
- Booking revenues of £5.8 million to date from global customer base
- Bookings can be made online and are ABTA/ATOL protected
- Excellent customer satisfaction ratings
- Developing globally recognised brand
- Highly experienced and committed management and advisory board
- Active sector for investment driving up company exit valuations
- EIS Advanced Assurance received
- Target return of 6x pre tax relief (8x post tax relief) after five years – high risk, not guaranteed
- Minimum investment £20,098 (equivalent to 325 shares)
- Single early stage company
Read important documents and apply
Suppose you want a truly unique and authentic holiday, personalised to your specific wishes – from a home-stay on a family-run organic cocoa and coffee farm among the indigenous community in Costa Rica, to spending an hour with the Kwitonda family group of 34 Mountain Gorillas in Rwanda.
Nowadays, you can book a holiday online in minutes, but realistically it won’t include experiences such as these. If you want something truly personal and authentic, you either have to do it yourself or use a high-end travel agency, which creates a tailor-made itinerary acting as a middleman between you and local tour operators. This is usually expensive and as personal as a service that involves a middleman can be.
Tom Stapleton and Huw Owen – both seasoned travel industry executives – thought there was a better way.
They believe no remote intermediary, no matter how competent or experienced, could match the knowledge of a carefully selected local travel expert who lives in and knows the destination better than anyone. But how to find a reputable, trustworthy local travel expert?
To answer that, they created TravelLocal (“TL” or “the Company”), an online platform that connects customers with trusted, vetted, local travel companies in 49 destinations worldwide. Because TravelLocal cuts out the middleman, you should get better value and a more personalised holiday, which the local travel expert will design, organise and deliver for you and with you.
In addition, you get the benefit of expert advice with the convenience of online booking. You also pay TravelLocal rather than the local agent, so your booking is ABTA & ATOL protected.
TL launched its platform in 2016. Travellers from 40 different countries worldwide have experienced what they describe as “perfect”, “fantastic”, “amazing” holidays. Indeed, the average review rating is 4.93/5 and an increasing number of travellers re-book and refer others.
As a result, the business has grown significantly and has recorded £5.8 million of booking revenues to date.
The growth opportunity could be considerable for a firm that manages to crack this market successfully. An estimated 2.8 billion people travel internationally every year, and this is expected to grow to 5.9 billion by 2030. Tailor-made holidays have become one of the fastest growing areas of the travel industry. The specialist sector is worth an estimated £30 billion and growing at 7% per annum.
Experiential travel is a hot sector for investors as well, attracting significant funding from venture capital and private equity. Indeed, TL has two institutional investors on board. The first is the highly regarded Baronsmead VCTs, via Gresham House; the second is Active Partners. In addition, in August 2019 the Channel 4 Commercial Growth Fund – the investment arm of the TV broadcaster – completed a £1m investment in TravelLocal in an airtime-for-equity arrangement.
TL is now raising up to £1.5 million under EIS to further develop its digital marketing, product offering and platform to accelerate its growth. This private offer is available exclusively through Wealth Club.
The minimum investment is £20,098 (equivalent to 325 shares).
Watch our video interview with the founders of TravelLocal:
The management is targeting investment case returns to investors of 6x before EIS tax relief (8x after EIS tax relief) after five years – returns and timeframes are not guaranteed. This is based on an EBITDA multiple of 10x.
Current M&A activity and interest in this sector suggest these multiples are not unachievable in our view if management can successfully deliver the business plan, but are not guaranteed. If management were to achieve its High case forecasts. which is not certain, we believe EBITDA multiple and return could be higher. Capital is at risk.
The 27-strong team is led by co-founders and joint Managing Directors Huw Owen and Tom Stapleton. Together, they have 30 years’ experience in the travel industry – both worked in management positions at Audley Travel.
The third co-founder and Executive Chairman is Mark Hudson, who previously spent 14 years at London private equity house Graphite Partners, latterly as a Senior Partner, investing in mid-market UK businesses across all sectors. Mark also has strong entrepreneurial and management experience.
The three co-founders have collectively invested in the region of £500k in the Company.
Key investors and advisors
In 2018, Active Partners invested into TL. Active Partners is a highly regarded London-based growth investor with a track record of backing founder-led businesses with a distinctive proposition and strong brand. Previous investments include Soho House & Co, cycling brand Rapha Racing and fast food chain Leon Restaurants.
In 2019, Gresham House Ventures, part of the Gresham House Strategic Equity division, invested via its two Baronsmead VCTs.
Active Partners has two directors on the Board and and Gresham House has a Board observer right.
In August 2019 the Channel 4 Commercial Growth Fund – the investment arm of the TV broadcaster – completed a £1m investment in TravelLocal in an airtime-for-equity arrangement.
In addition, TravelLocal benefits from several experienced board advisors, all of whom have invested in the Company and are actively involved. These include James Kydd, the current CMO of Purplebricks and former MD Brand and Marketing at Virgin Media, Alistair Daly, former CMO of On The Beach and Richard Kelman, former FD of Audley Travel.
As with all EIS companies, there is the option of a trade sale, a sale to another financial investor, refinancing or a stock market listing.
The market is starting to consolidate, and management believes there could be several potential trade acquirors, including specialist online travel companies (e.g. Airbnb), general online travel companies (e.g. Booking.com), other tailor-made travel companies (e.g. Audley Travel) and general travel companies (e.g. TUI), as well as private equity buyers. Should TL successfully achieve its plan, it could have many options and be an attractive acquisition target in our view. Exit options and timeframes are not guaranteed.
Risks – important
This, like all investments available through Wealth Club, is only for experienced investors happy to make their own investment decisions without advice.
EIS / SEIS investments are high-risk so should only form part of a balanced portfolio and you should not invest money you cannot afford to lose. They also tend to be illiquid and hard to sell and value. Before you invest, please carefully read the Risks and Commitments and the offer documents to ensure you fully understand the risks.
This is a single company EIS offer with no diversification. It involves investing in an early-stage business which is by nature high risk and prone to failure.
The value of tax benefits depends on circumstances and tax rules can change.
Fees and charges
Investors are investing in the Company directly so will pay no direct initial or ongoing charges. TravelLocal will pay an introducer fee of 6% to Wealth Club. For investors sourced by Wealth Club, a performance fee will be charged calculated as 10% of proceeds over 2x (after tax relief) which will be deducted by the Company on exit.
TravelLocal has established itself as a high-quality online provider of tailor-made holidays achieving booking revenues of £5.8 million to date, expecting to almost double in the current financial year.
This is an ambitious target, however the Company is well funded and its lean business model is refreshing, giving the market exactly what it wants. It has very high customer satisfaction ratings. Indeed, customers love the service – the average review rating is 4.93/5 post booking (98.2% score the Company 4/5 or 5/5).
The market is growing rapidly and has attracted significant interest from private equity and VC funds. There are several well-funded competitors and it is important TravelLocal can scale and secure market share, whilst delivering profits.
With the commitment from the experienced management team and VC backers we believe TravelLocal is an exciting albeit high risk investment opportunity with potential for growth, however experienced investors should form their own view.
Reserve now – no obligation
Wealth Club aims to make it easier for experienced investors to find information on – and apply for – tax-efficient investments. You should base your investment decision on the provider's documents and ensure you have read and fully understand them before investing. This review is a marketing communication. It is not advice or a personal or research recommendation to buy the investment mentioned. It does not satisfy legal requirements promoting investment research independence and is thus not subject to prohibitions on dealing ahead of its dissemination.
- Single company
- Target return
- Funds raised / sought
- £700,000 / £1.5 million
- Minimum investment
- 20 Aug 2019 for next allotment