When Freebird debuted its instant flight rebooking service in fall 2015, the Cambridge startup was making a big play for consumers with the promise of letting them rebook a canceled or delayed flight within 30 seconds. You would have to pay a small fee up front, but the rebooked ticket would come at no extra cost and you could book with any airline.
A year and a half later, Freebird is no longer chasing consumers. Now it's all about business travelers, and investors, including Kayak's (KYAK) earliest backer and a group of travel industry vets, see a lot of promise in the move.
Freebird announced on Wednesday that it has raised a $5 million round co-led by Cambridge venture capital firms General Catalyst Partners and Accomplice, bringing its total funding to $8.5 million. Travel industry vets participating in the round included TripIt co-founder Scott Hintz, former Travelocity Business President Ellen Keszler, former Travelex Insurance Services Global President Mitch Gross — all of whom serve as advisors for the startup.
"It's easy to see how the service becomes a must-have for anyone looking to take the hassle out of their travels."
The investor leading General Catalyst's investment in Freebird is Joel Cutler, who's responsible for getting Paul English and Steve Hafner together to found Kayak.
"Freebird's ability to detect problems and create instant alternatives is gaining great traction with travel management companies and their corporate clients," Cutler said in a statement. "It's easy to see how the service becomes a must-have for anyone looking to take the hassle out of their travels."
The company's new funding comes as it finds increasing traction in the corporate travel benefits space. After announcing its first major partnership last fall, Freebird said it now has reselling agreements with eight travel management companies total, six of which recently signed on, altogether representing thousands of clients and $6 billion in annual corporate travel expenditures, according to co-founder and CEO Ethan Bernstein.
Freebird's partners include Travel and Transport, one of the largest travel management companies in the U.S.
"That’s just the [tip of the] iceberg," Bernstein said.
Freebird makes money by charging businesses a quarterly subscription fee for coverage, which lets a company's employees rebook flights anytime there is a disruption. Freebird's fee is based on a risk profile it develops for each company, and it considers a number of factors, including the likelihood of a flight getting disrupted at the client's preferred airport.
For instance, a company based in Chicago will have a different risk profile than one that is headquartered in Phoenix.
"If you're in Phoenix, you're going to have a different likelihood of disruption and the cost of replacing tickets will be dramatically different as well," Bernstein said.
If a company ends up using Freebird's service more or less than anticipated by the risk profile, the difference is reconciled at the end of each quarter, with the company paying for the extra trip coverage or getting paid for the trips not used.
Bernstein said there is an incentive for businesses to get Freebird coverage flight disruptions increase the cost of air travel by 5 to 10 percent, which includes things like rebooking and hotel expenses, as well as lost productivity and missed meetings.
While Freebird's new investment round is meant to help it focus on the corporate travel space, Bernstein said the company will continue to provide Freebird as a direct-to-consumer product. But by focusing on developing relationships with corporate partners, Bernstein said it's allowing Freebird to reach more travelers than before.
That in itself could help Freebird raise more awareness in the consumer space, which Bernstein said has happened with other kinds of travel benefit companies before, including TripIt, whose co-founder is an advisor for Freebird.
"From the very beginning, we think this is something that will be useful for all types of travelers," Bernstein said.
Freebird currently has 12 employees and is "aggressively hiring."
