Can an airfare prediction app become a dominant player in the worldwide travel industry? That’s what Frederic Lalonde, CEO and co-founder of Hopper, is betting on with the Cambridge-based startup’s recent closing of a massive Series C round for $82 million in Canadian dollars (the startup also has an office in Montreal). That roughly equals to $61 million in U.S. dollars, which is almost double the average deal size of Series C rounds this year, according to data compiled by Mattermark.
To raise this round, which Hopper announced Thursday, Lalonde and his team managed to land Caisse de dépôt et placement du Québec, one of North America’s largest pension fund managers, as the lead investor. Also known as CDPQ, the firm had $254.9 billion (Canadian) in net assets under management as of June, 30 2016, and it has invested in other startups, including the Peter Thiel-backed Palantir. Hopper's existing investors, including Accomplice and Brightspark Ventures, also participated in the round, bringing total funding to $104 million (Canadian), about $78 million in U.S. dollars.
"We’re doing this to take over the world."
“We’re doing this to take over the world,” Lalonde told me earlier this week, noting that Hopper now sells flights in almost 130 countries now. “We have a window in next two to three years to completely dominate mobile” in the travel industry.
Since releasing the airfare prediction app in early 2015, Hopper has seen impressive growth. In the past year, the iOS and Android apps have grown from 1 million to 10 million users, with sales having grown by a factor of 23 this year. The startup says it's now selling $1 million in flights every day, with 90 percent of those sales coming from push notifications.
"To be perfectly honest, we were surprised by how fast this has grown," Lalonde said.
Hopper plans to use the new funds to expand its international presence, increase its partnerships with airlines and increase its workforce of 40 employees, who are split 50-50 between Cambridge and Montreal, to 120 by the end of next year, Lalonde said. More specifically, the startup is planning to open local travel agencies in 20 countries in Latin America, Europe and Asia — a requirement the International Air Transport Association has for companies that want to price tickets locally.
Hopper was originally founded in 2007 as a service to help travelers discovered new destinations, but it pivoted several years later to launch an airfare prediction app in January 2015. By landing agreements with global distribution systems, which are the networks that facilitate transactions between travel service providers and travel agencies, Hopper has been able to amass a deep trove of data on flight price quotes — 5.2 trillion prices over several years, to be exact — to make accurate predictions on whether to book a flight now or wait for the best price. It says its app is now 95 percent accurate on predictions.
The app works by letting you enter a flight destination and when you would like to leave and return. It then lets you decide whether to buy a ticket at the current price or watch the flight for that date, which will then give you push notifications for when deals are available and if the price goes up or down. When you're selecting dates, Hopper's calendar gives you a view of which dates are cheaper or more expensive. It even tells you if it thinks the price won't go any lower.
The result is that Hopper users have been able to save a total of at least $30 million on airfares. On an individual basis, the startup has said that it can save shoppers an average of $50 per booking and, in some cases, as much as $1,500.
