MyRealTrip, South Korea’s online travel platform, which had its roots in tours and activities, made headlines on July 29 when it raised US$36m in a funding round led by existing investor Altos Ventures along with IMM Investment and Smilegate Investment. New investors including Korea Development Bank, Singapore-based Axiom Asia Private Capital, France-based Partech Partners, and US-based Tekton Ventures also participated.
CEO and founder, Donggun Lee, speaks to WiT’s Yeoh Siew Hoon about the challenges of the latest fund raise, and how the company is weathering the Covid-19 storm.
Q: Congratulations on the latest fund raise of $36m. How challenging was it to raise at this time? What did you have to do to convince existing investors this was the right time to continue their support?
To be honest, fundraising in the pandemic was not easy. Up to January, when our monthly transaction value reached 52 billion won, many domestic and foreign investors had reached out to us seeking investment opportunities. However, after the pandemic was declared, we could not find a single email or phone call from investors. It was hard.
However, we had two strong beliefs. The first belief is that even after Covid-19, people will travel again. The second belief is that people in the Post-Corona era will want a more personalized and varied experience for their travel, and MyRealTrip is the best service for them.
Based on our beliefs, we started discussions for Series D funding with existing investors who shared our beliefs. We convinced existing investors that MyRealTrip will be the market leader for the Korean travel industry in the post-coronavirus era. In addition, some global investors, who believe Korea’s overseas travel demand will recover most quickly, expressed their interest in MyRealTrip as well.
Q: Most fund raises at this time have led to decreased valuations. Was this the case as well? (You’ve raised $68.6 million since 2012.)
Our valuation did not go down. Investors gave high marks to the performance of MyRealTrip over the past years, and based on this, we were able to increase our valuation for Series D funding compared to that of Series C.
Q: What will this new fund raise go towards?
We plan to use the funding to recruit the best people for MyRealTrip. With the top talent, we will keep focusing on upgrading our search and recommendation algorithm as well as improving the process in which users can customize their itinerary such as flights, accommodation, tours, activities, and more based on their preference.
Q: What did you do to survive the past few months? After all, your business was built on outbound travel, so that must have been a major challenge with the stoppage of travel.
We made every effort to find opportunities in the domestic travel market, and we are making progress. South Korea is one of the most successful countries in the world to combat the coronavirus. While it is still impossible to travel abroad, domestic travel has become recognized as a safe substitute for outbound travel. Korea’s domestic travel demand is already recovering, and the number of Korean tourists visiting Jeju Island, the most famous vacation spot in Korea, has already exceeded the level before Covid-19.
Until the demand for overseas travel recovers, we will focus on domestic travel demand and enhancing our services. We strongly believe that we can acquire new Korean travellers to our service by selling domestic travel products, and the customers will become our overseas travellers in the post-corona era. In addition to swiftly revising our business strategy, we attempted hard to secure cash liquidity as well.
Q: You recently got married – I guess this was not how you had planned to spend the first year of newly-married bliss doing, saving your company. How has it been personally? How have you managed personally?
I’m pretty sure that marriage itself is really helpful for me. Despite the tough situation, I can keep my mind stable thanks to my wife and family.
Q: How did you adapt your business to the current trend of domestic travel, road trips and smaller accommodation? What new product/content did you build?
Compared to the pre-Covid 19 situation, we see increase in demand for sectors such as rent-a-car and private accommodation. People prefer to travel by their own car or rent-a-car instead of using public transportation. And they are seeking private accommodation instead of large hotel chains. We are partnering with leading local accommodation aggregators and local rent-a-car platforms which are specialized in each sector.
Q: What other opportunities do you see MRT capturing the next half of the year?
Just like what we did in outbound travel, we will focus on the cross-sell strategy in the domestic travel market, specifically bound to Jeju island, for the rest of the year. Considering over a million Korean travellers visit Jeju every month, we believe that there is a huge cross-sell opportunity.
Q: Give us an update on the market trends you are seeing in South Korea and what’s your outlook for recovery.
It is almost impossible to say when the demand for outbound travel will recover. Instead of trying hard to predict when the demand comes back, our plan is to keep our eye on key indices to find signs for the recovery of outbound travel. And at the same time, we will strive to develop our product and contents to satisfy the needs of domestic travellers.
Q: How will you help South Koreans, when they are ready to travel abroad, become more confident about travel?
To avoid risk of coronavirus infection, we believe that travellers will no longer be looking for group tours with more than 30-40 people and the preference for travel destination will shift from big cities to smaller, less populated places. We will help Korean travellers discover the beauty of experiencing local cities which have not been famous before the crisis. And we will strengthen our small/private tour offerings.