The journey to capital in travel-tech startups

Abstract

Despite the extensive literature on the significance of travel technology, prior studies have primarily focused on its impacts from the consumer experience perspective, neglecting the survival and growth dynamics of travel-tech startups that drive disruptive innovations in the hospitality and tourism industry. This study aims to fill this gap by investigating key signaling factors that determine startups' ability to secure Seed and Series A round fundings, enabling them to navigate early-stage challenges and overcome the Valley of Death. Analyzing data from 288 travel-tech startups in Korea, the study highlights the critical roles of founders’ human capital and early financing experiences. Notably, early financing experience was found to have a significant “stepping stone” effect on subsequent investment success. In contrast to previous empirical evidence, the patent portfolio, as a proxy for innovation capability, did not effectively signal value to potential investors.