Travel Startup Funding Slows Further in Q2 2025

Travel startup funding took another hit in the second quarter of 2025, slipping to just $800 million, down from about $1 billion in Q1. According to Phocuswright’s Travel Startups Interactive Database, the combined total for the first half of the year suggests annual funding may reach only $4 billion—well below the $5.5 billion recorded in 2024 and a far cry from 2021’s record-breaking $16 billion.

The subdued investment activity reflects ongoing global uncertainty, with headlines dominated by tariffs, political instability, and conflicts that have put many investment decisions on hold. Travel tech startups able to secure significant funding were few and far between. Ramp led the pack with $200 million, followed by Canary Technologies with $80 million, Fora with $60 million, and Holidu with €46 million. Onfly also defied the downward trend with a $40 million round in April.

Outside these larger raises, most funding rounds fell below $10 million. Notable exceptions included Tern, which raised $13 million in Series A funding, and Kolet, which brought in $10 million. Chatlyn secured €8 million, and Unravel closed a $7 million Series A. Only a handful of startups at the pre-seed and seed stage managed to attract capital, including Juno with $2 million, Travaras with $1.4 million, and Airial Travel with $3 million.

Investor caution appears driven not only by macroeconomic concerns but also by questions surrounding artificial intelligence. The rapid emergence of AI-powered travel tools has created a crowded and fast-moving landscape, prompting investors to scrutinize business models more closely. Startups must now differentiate themselves not only through innovation but also by demonstrating real traction and scalability.

Marc Andreessen of Andreessen Horowitz recently advised that Series C to E companies are the “sweet spot” for investment in the current AI-driven tech cycle. This signals a shift in investor focus toward startups with proven models and upward momentum, limiting opportunities for early-stage ventures to gain funding.

A recent global survey presented at Phocuswright Europe confirmed the difficulty of the current environment, with around two-thirds of travel founders describing the funding climate as either “very difficult” or “somewhat difficult.” Compared to Q2 of 2024, when big names like Guesty and Fetcherr raised notable rounds, the current environment appears far more constrained.

While the drop in funding might push some startups toward mergers and acquisitions, Q2 did not bring a wave of M&A activity. Still, Kinnevik, a venture capital firm with investments in Mews and TravelPerk, reported encouraging signs of renewed M&A and IPO potential.

Major deals that did occur included Marriott’s $355 million acquisition of CitizenM, Sabre’s $1.1 billion sale of its hospitality unit to TPG, and JetBlue’s sale of JetBlue Ventures to SKY Leasing. Other deals involved Lighthouse acquiring The Hotels Network, Duetto acquiring HotStats, and HBX acquiring Civitfun. Juniper also continued its acquisition spree by purchasing RezMagic.

Despite the slump in funding and IPO momentum, leading investors remain cautiously optimistic. F-Prime Capital’s Gaurav Tuli believes the market has matured and that capital will eventually flow more freely, especially as travel tech gains broader recognition as a scalable and viable category. For now, however, startups must weather the storm with lean operations, strategic pivots, and a strong focus on sustainable growth.

Tags: phocuswire

Travel Startup Funding Slows Further in Q2 2025

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