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ToursByLocals snaps up its first funding, C$33M, to link sightseers with guides globally

The tours and experiences market is projected to be worth $183 billion this year, and today a startup that has made inroads into the space through bootstrapping is announcing its first outside investment.

ToursByLocals — which sources local guides in some 162 countries, then helps tourists search and book them for either individual or small group tours and experiences in the place they are visiting — is today announcing 33 million Canadian dollars (US$25 million) in funding, from a single investor, Tritium Partners, money that it plans to use to hire more talent, build out its proprietary booking, payment and review publishing technology and expand its business development team.

This is the first outside funding for the Vancouver, Canada -based startup, which for the past 10 years has bootstrapped its business, building it up to 1.45 million customers and some US$45 million in revenues. It has around 100 employees today.

The valuation of ToursByLocals — co-founded by Paul Melhus, Dave Vincent and Luciano Bullorsky — is not being disclosed, but for some context, it’s operating in a dynamic (and crowded) space that includes competitors like Airbnb (by way of its Experiences effort); Berlin’s GetYourGuide, which last year raised funding from SoftBank and is now valued at over $1 billion; Hong Kong’s Klook, also backed by Softank and also valued at over $1 billion; Withlocals from the Netherlands; and more.

But it’s not all up, up, up: Vayable, an experiences startup incubated in Y Combinator, quietly shut down in December.

The company today says it has some 4,130 professional guides and 30,000 different tours discoverable on its platform, ranging from small group tours to private excursions. Its unique selling point up to now has been the fact that it curates the guides it works with — on average only one in 10 applying gets selected, the company tells me; and also, that it has focused on people who you might not typically associate with touristic outings, including “archaeologists, art historians, wildlife experts, photographers and foodies.” The idea here is that “local” doesn’t just mean someone who lives in the area, but someone very close to a particular subject.

“A private tour with a local guide is the best way to experience a destination. Since our founding, we’ve focused on creating truly memorable private tour experiences for travelers, while helping local tour guides offer customizable tours in over 1,000 destinations globally,” said Melhus, the CEO of ToursByLocals, in a statement.

“We are excited to partner with Tritium. In addition to growth capital, we value the strategic advice offered by both the Tritium team and its network of experienced marketplace executives, as we continue to scale up our operations as a leading online travel marketplace.”

Indeed, for a first outing into the private venture markets, Tritium Partners is a notable backer — a private equity firm that has built a focus in the travel market, backing the likes of HomeAway and a peer-to-peer RV rental marketplace, RVShare.

“ToursByLocals stood out as the premier private tour marketplace with the highest quality tours and local guides in the industry,” said Brett Shobe, a partner at Tritium, in a statement. “We’re thrilled to partner with the ToursByLocals team and look forward to leveraging our capital and resources to support and accelerate their exciting growth trajectory.”

Today, the startup appears to be picking up the majority of its business through direct sales, which helps the startup control the full experience. Part of its hand-picking of guides includes running background checks on them, and it also handles payments and any customer support directly. This seems to have a positive impact on both sides of its marketplace, both by getting repeat business from travelers but also positive responses from guides. ToursByLocals earns a 20% commission on all tours booked.

What will be interesting is to see whether, in a bid for more scale, ToursByLocals expands the third-party aspect of its business. That could include feeding its own product into aggregation platforms like Booking.com or Airbnb, which are keen to expand their revenues per user with extras like tours and experiences, on top of airline and other transportation sales, accommodation bookings and other travel services they may already offer.

Or it could mean bringing in more third-party content to its own platform, for example larger tours or other travel-related products and services. The company is also looking at ways of letting people “share” small tours with others, for example if two couples on a cruise are looking to split the cost of a four-person day tour when they each step ashore during a cruise.

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