Why are VCs betting on e-VISA startups?
The real business isn't Visa processing.
Welcome to the 204th edition of the GrowthX Newsletter. Every week I write 2 pieces on startups & business growth. Today’s piece is going to 95,300+ operators & leaders from startups like Google, Stripe, Swiggy, Razorpay, CRED & more
Atlys - a visa platform raised $12 million a few days back. With only 20 million Indians traveling abroad last year & only 1/3rd of them for tourism, why are VCs pouring in money on 'Visa' / 'travel' startups👇
Before I begin, Atlys isn't alone - this category has a bunch of local conventional players & tech startups like Teleport (consumer-focused), and StampMyVisa (B2B travel agent-focused).
Why are they VC investible businesses?
Short answer - average revenue per user.
You see, Indians spend over 80% of their disposable income on 4 specific categories (you will get this same data by reading credit card reports) → Real estate/ Education/ Travel/ Shopping & of course weddings.
Travel category customers typically have high disposal incomes & are more value conscious and relatively less price conscious. Read that line again.
This means these startups are trying to sell "wants" vs "needs" to these customers. Every player is focusing on a different marketing/ product pitch to go after the same customers.
Atlys is using the Visa pitch while Scapia is using the international travel credit card. And that's the core game - travel VISA is just a filter to target the right kind of customers. The real money isn't in visa processing commissions or being a travel card company, it's in cross selling other stuff.
What will they cross-sell, really? 🤯
Foreign exchange 💵
BookMyForex has solved it to an extent but its discovery is still broken when you book on MakeMyTrip. This might be the first thing they attack.
The hotel bookings 🏨
They won't really need to build the supply from the ground up - just integrate with the existing hotel players & take the recurring commissions.
Curated travel experiences 🏔️
Airbnb has cracked it really well with airbnb experiences. It's a high ticket sale especially when it comes to international travel. Thrillophilia.com version for international cities could be the easy reference.
International flights ✈️
And it's a tough one to beat considering the commoditisation of flight platforms and there is hardly any new user value that could be created.
I'm hopeful - over 50 million Indians will travel aboard by 2030 and that's a huge ARPU (average revenue per user) market to go after. No wonder, every VC is pouring in money in players that will want to take a piece of the pie.
That's all for now
I wrote a longer piece on how Airbnb printed $1.9 billion in profits last year. I am plugging the article below - do read for deeper insight 👇
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