In this technology-obsessed market, the term "start-up" usually evokes ideas of cloud computing companies, machine-learning platforms and shiny software as a service interfaces.
However, these are by no means the only way to hit it big in the venture capital arena. Because of the remarkable success that Airbnb has experienced, achieving a reported $30 billion valuation, investors have taken notice of the vacation rental property sector and are shuttling funds to other start-ups homing in on this trend.
Vacation rental property start-ups have been attracting big bucks from some of leading VC firms. Companies that specialize in travel booking, including alternative accommodations such as rental properties, attracted more investor interest last year than any other sector.
In the first quarter last year, $100 million in VC money funded a total of 11 vacation rental start-ups. Although the majority of these start-ups were based in Europe, more than 50% of the total funding went to three American companies, including Vacasa, a platform for both consumers and property managers.
Vacation Rental Start-up Funding, January to April 2016
|Company||Funding Round||Headquarters||For Consumers or Property Managers|
|Vacasa||$35 million, Series A||Portland, Ore.||Both|
|HomeToGo||$20 million, Series B||Berlin||Consumers|
|LeisureLink||$17 million, Series D||Pasadena, Calif.||Property Managers|
|TurnKey||$10 million, Series B||Austin, Texas||Both|
|Holidu||$5.4 million, Series A||Munich, Germany||Consumers|
|HomeRez||$4.5 million, seed||London||Both|
|NextPax||$2.7 million, Series A||Almere, The Netherlands||Property Managers|
|Bnbsitter||$2.5 million, Series A||Paris||Property Managers|
|Le Collectionist||$2.2 million, seed||Paris||Consumers|
|Snaptrip||$2.2 million, Series A||London||Consumers|
|Edge Retreats||$1 million, seed||London||Consumers|
The industry has become fertile ground for investment.
Although it comprises just 10% of the global hospitality industry, the rental property segment is valued at more than $100 billion, leaving room for entrepreneurs to make their mark. That means abundant opportunities for investors, if they know where to look.
Consumers are becoming increasingly interested in bespoke accommodations that offer authentic, local experiences unavailable at high-rise hotels and resorts. Research suggests that, in 2014, twice as many people reported staying in a rental property as opposed to a traditional hotel, an increase of 100% in the past six years.
Even the big corporations know that they need to adapt to this changing trend.
Hyatt Hotels Chief Executive Mark Hoplamazian said that the company is "looking beyond hotels to serve evolving needs of guests" in a recent interview.
Evidence of the fertility of this industry is also visible within a broader hospitality context, as travel giants take notice of their small competitors.
In 2015, online travel powerhouse Expedia acquired rental property start-up HomeAway for $3.9 billion. Last year, TripAdvisor jumped on the bandwagon after purchasing London-based start-up Housetrip.
Furthermore, many VCs think that the industry itself needs the help of technology.
"This is a super-fragmented market where almost every property is individually owned and ripe for technology to help aggregate all the supply," said Anthony Lee, managing director of Altos Ventures, which recently acquired TurnKey Vacation Rental.