Don’t Fight the Tape

In my 20’s during the .com run of the late 90’s, I traded IPO’s and wrote a book.
One day, a guest staying at our fly-fishing lodge told me, “Matt, you can’t fight the tape.”
He was hoping my publisher, John Wiley could get “Trade IPOs Online,” printed and in bookstores before the stock market crashed.
The term “don’t fight the tape,” means, that you don’t bet or trade against the underlying trend in the financial market.
“The tape,” refers to the ticker tape used to transmit stock prices.

Sure enough the stock market crashed shortly after my book came out and immediately interest in trading in IPOs went out of favor.
We made money, yes, but nowhere close to what we could have, had the market kept going in an upward direction.

Lately there have been reports and commentary on how seed-stage funding is drying up for startups.
Seed-stage investment, $500K-$2M is in a downward projection and most likely the trend will continue.
So what can a startup with great technology, traction and limit prospects for raising investment capital do?

You can sell your company.
If you’re not having success raising capital in this down cycle, stop trying to fight the tape.

You won’t read much online about how to sell a travel technology company.
Everything in travel tech media is centered on raising capital.

Selling is another option.

Corporate travel companies are active in the market right now looking for new technologies and teams of engineers to acquire.
I believe over the next 12-18 months we will see more acquisitions in the travel startup scene as founders wizen up and look to sell vs. continuing to pound their head in the sand trying to raise seed-stage capital.

Technology is accelerating so fast that corporates will need to start buying to keep ahead of their peers.

The opportunity will play into the hands of talented travel tech startup engineers that see the light and decide to sell while they are on top.

Photo credit: CB Insights https://www.cbinsights.com/research/travel-tech-exits-mergers-acquisitions-ipo/

Think about this for a second.
The average sale price of a US tech company is estimated to be between $10M-$15M.
Acquiring this data is really difficult as most sub $30M deals don’t get published.
After working 2-3 years in your startup, why not sell for $5M-$25M if you can get it?
If you haven’t raised a large seed round, your founding team probably owns 60%- 90% of the equity ownership.
A $10M sale which is peanuts for a large corporate to spend will net you $6M-$9M.
You’ll be millionaires and you can continue building what you started under a larger entity with massive cash reserves and human capacity.
Bank $85K-$125K a year for a minimum of 2-years working for the acquiring company, then after your lock-up period take some time off and start again on your next idea.

The IPO is the dream being sold by VC’s and their puppets the tech media.
It’s estimated that less than 1% of startup technology companies will actually go public.
SendGrid, IPO’d recently, after founding the company in 2009.
The two founders had less than 3% ownership stakes post the IPO.
Maybe they took some money off the table in the B and C rounds, I don’t know.
The winners in this deal, obviously the VC’s.

Today we are preparing to sell one of our highly valued portfolio companies to a corporate travel buyer.
We’ve built a list of 100 potential acquirers and will be reaching out to them soon.
Hopefully you can read about the transaction here in 6-12 months.

In today’s downward funding market for seed-stage capital there are other options.
Continue to bootstrap, maybe raise a smaller round to buy time or sell if you can become a millionaire.

FlitWays Goes Public, Travel Startups Incubator® First Exit

FlitWays Technology Inc. has gone public. FlitWays trades publicly under the stock symbol FTWS. FlitWays Technology lead by CEO Tobi Mac and Director of Growth Zacky Hamraz has been growing fast and this summer their team decided the best route to raising capital and growing the company was to go public.

This is Travel Startups Incubator® first exit from our portfolio of 19 travel tech startups so we couldn’t be more excited, says Matt Zito, managing partner. The FlitWays exit from our portfolio came fairly quickly as we have been operating as a seed-investor for 2-years.

FlitWays route to going public is somewhat unconventional here in the US at such an early-stage but was strategic in nature and makes the move that much more brilliant. Uber and Lyft are two of the biggest names in travel tech ground transportation valued at billions of dollars yet the average individual investor can’t get access to invest, due their being private companies.

FlitWays leverages the hottest market in travel ground transportation and for the first time enables investors in the US to invest in this fast growing sector. By going public FlitWays creates a competitive advantage for itself against it’s peers and opens up a larger base of investment opportunity.

Going public as an early stage tech startup is nothing new overseas. Over 100 Australian tech startups have gone public in the last two years. Citing, venture capitalists in the US scaling back their investments and VCs wanting to invest further downstream, Flamingo an AI-focused Fintech startup went public recently on the Australian Securities Exchange (ASX).

Noteworthy travel tech company Yatra recently announced it will be going public and Trivago just recently announced that they will be having an upcoming IPO.