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If you’ve turned off news notifications (we don’t blame you), we’ll be the bearer of the good news that the UK intends to fully relax most Covid restrictions on July 19th. For all the hospitality venues from hotels, to restaurants, to bars and clubs that have had their doors forcefully closed, it’s finally go-time.
This year has been tough for the hospitality sector. Investment fell, businesses went bankrupt, people lost their jobs. However, throughout the process, we’ve seen startups be incredibly agile and innovative – in some cases, even more so than their more established counterparts.
Our Campaign Development team has their eye on a number of promising young companies that have not only defied the odds, but are bringing better, leaner, stronger business models to market.
Seedrs is sector and stage agnostic, meaning we open up investment opportunities in any sector, at any stage, whether that be fintech unicorns or League 1 football clubs. Of the 800 businesses we’ve supported, almost none have had a tougher time during the pandemic than our hospitality businesses, especially the bricks and mortar ones. The closure of hospitality venues and limits on public gatherings eviscerated their primary revenue streams overnight. Whilst this has been devastating to see, one amazing consequence was the resilience, determination and grit that these businesses showed in their fight to stay solvent. The hospitality industry is a vital sector of our economy, and primed for a rebound after over a year of limited social interaction. Alongside partial reopenings in the UK, we’ve seen that there is huge pent up demand for hospitality experiences.
One business that I think is poised to capitalise on the UK’s reopening is esports bar Platform. The term ‘sports bar’ is etched into our common parlance. Bars are the places we associate with our favourite sports teams, as I’m sure many England fans can currently attest to. However, despite growing by over 10% per year with almost half a billion people watching in 2020, we have yet to see the esports industry in the mainstream. Platform aims to change that, with a fully kitted out bar offering multiplayer zones, PC and esports packages, as well as traditional sports viewing, and an onsite kitchen. With £1.5M of fresh funding secured in May, Platform is well capitalised and ready to tap into growing esports enthusiasm. I’m certain it won’t be long before we have our favourite local esports bar.
The reopening of hospitality poses a really interesting opportunity moving into 2022. Simply put: people have not lost their appetite to eat out. So as legislation allows, demand is likely to move back to pre-pandemic levels as long as the recovery stays on track.
This also means there are some really interesting opportunities for new brands and concepts moving into the space. Landlords are simply not able to charge the same premiums on rent as they were in 2019, so vacant locations in key areas are up for grabs at reasonable prices. This means, ultimately, the startup overhead costs of securing a new venue are lower, and monthly outgoings are less likely to put unsustainable financial strain on a young business.
KuPP is an example of a brand that has realised this. Operating one large restaurant in Paddington, founder Steve and his team are leaving the pandemic with bold growth ambitions – and a wealth of opportunities to expand the concept into smaller, more central venues. KuPP and other brands will likely consider adapting their concept to fit the available space, so don’t be surprised to see existing brands opening new venues that represent an offshoot from their familiar business model!
According to Skift Research, investment activity into startups in the hospitality industry in 2020 saw a 55% decline in 2019 due to the pandemic, with €4.2 billion of fresh capital invested into the travel industry globally. In 2020 however we’re seeing positive signs of an upward trend in investment. Take TravelPerk for example, the Barcelona-based SaaS for corporate travel booking and management, which just raised a €135M financing round in April.
Another Spanish startup I’d like to highlight is BYHOURS, the leading microstays hotel booking platform in Europe. The platform allows its users to book more than 3,000 hotels in 600 destinations and pay just for the time needed. Founded in 2012, BYHOURS has raised a total of €18.5M in funding from Angel Ventures, Howzat Partners, Axon Partners, and other investors, and now operates from two offices; Barcelona (headquarters) and Mexico City (an operational hub for USA and Latin America). The company also recently announced a new partnership with Sabre, which has opened an opportunity to offer BYHOURS’ products to more than 100,000 agencies on Sabre’s global platform. The passionate, international, and innovative team behind BYHOURS has set its sights on revolutionising a very conservative industry, and so far they’ve done just that, with great success.
The hospitality industry has been put under more strain than most throughout the Covid-19 pandemic as restrictions closed doors for the majority of the past 18 months. During this time, we saw lots of businesses pivot and innovate in order to stay afloat. On the Seedrs platform, we saw new sectors come to light like ghost kitchens – including Feastr, Peckwater Brands, and Cook + Thief. We also saw ordering platforms launch like Big Night, which was created during the pandemic to help keep independent restaurants alive. Whilst investment in hospitality fell by 13.7% last year, and with the industry still operating under restrictions, the full impact on the sector is not likely to be fully appreciated for a number of years.
One startup that has continued to thrive throughout the past year and a half is female-founded Rudy’s. In 2018 Ruth (Rudy) Mumma launched Rudy’s Dirty Vegan Diner in Camden with her partner Matthew Foster, setting out to prove that plant-based food could be just as indulgent as meat. Fast forward to 2021, and the business operates two vegan diners in North London, as well as two vegan butchers, including one in Selfridges. On the launch day of their first plant-based butchers site (the first of its kind in the world), which happened to be World Vegan Day in November 2020, they instantly sold out of stock, both in store and online.
Rudy’s raised £700k in January 2021 and shortly thereafter announced a move to a larger, state-of-the-art kitchen, to keep up with demand, develop new products and expand its range of DIY kits. With the global plant-based meat market set to reach $35B by 2027 as more and more consumers adopt a flexitarian or plant-based lifestyle, this is a trend that we don’t see slowing down any time soon. I’m really excited to see how Rudy’s will continue to grow.