A range of innovative ridesharing, rental, and hailing companies were among the top app-based businesses. Credit: Snapic_PhotoProduction / Shutterstock.com

A range of innovative ridesharing, rental, and hailing companies were among the top app-based businesses in terms of the amount of venture financing they received in 2021, within the travel and tourism space.

This trend showcases renewed confidence from investors as the impact of the pandemic lessens, as well as their keen interest in technologically advanced app-based companies that can offer alternative transportation methods, which is also in growing demand from consumers.

According to GlobalData’s Deals Database, in 2021 there was a 183% year-on-year increase in the number of venture financing deals that took place involving travel and tourism apps, as the pandemic drained confidence from investors in 2020. Financing in ridesharing, rental, and hailing apps drove the stiff increase in deal frequency. Investors witnessed these mostly young companies navigate through the pandemic, which demonstrated that many have resilient business models.

Out of the 26 venture financing deals involving travel apps in 2021, 46% of them involved ridesharing, rental, or hailing companies that are app-based. Four of these deals involved start-ups, which spanned from the UAE, to France.

Innovation attracts investment, as seen with BlaBlaCar

The ridesharing, rental and hailing start-ups that received venture financing in 2021 share common themes of operating innovative business models and working with advanced forms of technology, which are integrated into their apps.

For example, French start-up BlaBlaCar carried out a new $115 million funding round in 2021. The company has over 90 million members travelling by carpool or long-distance buses across 22 markets. Its focus on carpooling, and the sharing economy through its app, has allowed the company to become a sort of Airbnb for transport. It benefits from a highly unique type of supply that has not been seen in this space, as any car owner can share their long-distance ride with passengers wanting to travel on the same route. Additionally, BlaBlaCar uses machine learning to maximise the success of its new drivers. It uses the data it collects from members to create personalised recommendations and tips, which are then pushed to drivers to increase engagement.

This unique type of business model, and use of advanced technologies, is what attracts many initial investors.

Millennials and Gen Z will drive app usage

According to GlobalData’s Q1 2021 Consumer Survey, 43% of Gen Z and 41% of Millennials are ‘often’ or ‘always’ influenced by how digitally advanced a product or service is. This points to the fact that these cohorts will be leading demand for app-based transportation alternatives.

Innovate business models and use of technology will continue to create new entrants into the ridesharing, rental and hailing sub-sectors, further attracting financing from investors that are looking for a piece of the next Uber.

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