Hopper: Behind The Deal With Brightspark Ventures
Photo: Sophie Forest, Managing Partner, Brightspark Ventures & Fred Lalonde, Founder & CEO, Hopper.
On October 3, Montreal-based Hopper announced it had successfully completed a USD $100M Series D round, led by OMERS Ventures and included participation from CVCA members Brightspark Ventures, BDC Capital and Caisse de dépôt et placement du Québec (CDPQ). Other participating firms in the syndicate included Accomplice, Investissement Québec and Citi Ventures.
Hopper is a rapidly scaling travel-booking application; using data and AI to predict the cheapest time to book flights. The startup is nearing a $1-billion valuation after this latest round.
Montreal-based VC fund, Brightspark Ventures is an existing investor, first backing the company in 2007. We caught up with Sophie Forest, Managing Partner at Brightspark to go behind the scenes on the opportunity with Hopper as an original investor.
Why did Brightspark choose to invest in this opportunity initially? Where did you hear about the company/opportunity?
Fred Lalonde, the CEO of Hopper, approached our team more than 10 years ago. He had just left Expedia, where he had worked for several years after they acquired his travel company, Newtrade. Fred had a vision to bring travel to the next level by capitalizing on the fundamental trend of online travel and optimizing it.
The response from everyone at Brightspark was unanimous: Fred is an amazing entrepreneur, and a domain expert in a large market ripe for disruption. We were not sure about his specific plan, but we knew that if someone was going to bring travel to the next level, it would be him. We offered him some working space in our office where he started growing his company. We invested a small amount, and the rest is history!
What was your initial investment used for and how did that help the opportunity scale? What is the current investment going to be used for?
In its first few years, the company was really looking for the killer proposition that would change the way people plan and book travel. They aggregated a lot of data, built a lot of tech, and always did everything with a small, dedicated team. The company was very frugal until it found its product-market fit. Back then, most of the capital was used to support the tech team.
This new round of financing is really aimed at scaling Hopper. We have validated that people love using the Hopper app, that it is unique, and has the potential to become the main tool that people use for all their travel needs. Now that the company has a “war chest”, they can focus on optimizing the experience for its users, all while accelerating growth. The new financing will be used to double the team and invest significantly in promoting both the app and the company.
With all of the competition in the space, what is your anticipation about this sector (ICT/Travel) in the short term and long term?
Over the past decade, many industries have undergone a massive shift focused on embracing digital technology. Travel was one of the first market sectors to get online, but the shopping/booking experience did not evolve at the same pace as other markets. Generally, users are shown a long list of options (hotels, flights, cars, etc.) that don’t differ much between websites. Every platform and/or aggregator competes in a race to get users to book with them first.
Hopper is changing this paradigm. They are the only platform that we know of that is advising users not to buy more often than they are advising them to buy. They are putting the power back in the hands of the consumers. People love it (just head to their Twitter account to see the endless stream of delighted users) and we think that the current success of Hopper can only accelerate.
The other differentiator is that the platform allows users to plan their travel using the device they always have with them: their smartphone. Hopper was built for mobile, while most of their competitors built their mobile app as an afterthought. That’s part of what makes Hopper different and why it’s changing how users book and shop for travel today.
Long term, we believe that big data will take over where travel agents left off (particularly in the consumer market), and that AI will not only replace the endless online planning, site hopping, and price chasing, but also optimize travel. This means that long term, Hopper can become the 800-pound gorilla in the world of travel.
What was the strategy in this latest fundraising, leading to one of the biggest fundraising in history?
Hopper is disrupting one of the largest online industries, has an innovative management team, and is in a market with almost no ceiling. We needed to be bold and fund the company to match its ambitions.
What is your exit horizon on this deal?
When we believe in a team and a market, we want to support them all the way to liquidity. There is a real potential for this company to eventually go public when the time is right.
Tell us about the lead at your firm involved in this deal and their experience with Hopper and their management team?
Brightspark’s Managing Partner, Sophie Forest, has been on the Board of Directors of Hopper since 2007. She has been working with this management team since the beginning. In the early days, Joost and Fred, the two co-founders, even worked out of Brightspark’s offices, where they pioneered the use of new databases with the ability to manage big amounts of data. At the time, progress seemed slow from an outsider’s perspective, but they were building a solid foundation for what Hopper is today.
Sophie has a unique perspective on the company because she has been through every possible cycle with them: very slow progress in the early days, trials and error, change of plans, building the culture and the team, small and large financings, and now, huge growth and impressive potential.
Anything else about Hopper, this deal, or the syndicate that you’d like to comment on?
We are really proud that this financing came mostly from Canadian investors. Caisse de Dépôt et Placement du Québec (CDPQ) came along two years ago to support the first wave of growth for the company, and now OMERS Ventures showed leadership in this round with its strong support of Hopper. We can build tech leaders in Canada if our support aligns with their ambitions.
It’s also interesting to note that through Brightspark’s model, a group of individual accredited investors from our network also participated in this financing. It’s a solid milestone and validation of our model. It’s exciting to be able to have individual Canadian accredited investors accessing what some have called “one of Canada’s largest VC financing” and give them the ability to invest at the same terms as large institutional investors.
Diversity in the Portfolio Company and Community Impact
What is the number and percentage of women on the executive team in this company?
3 out of 9 (33%). Notably includes Maggie Moran, featured in Forbes’ 2018 “30 under 30” list.
What is the number and percentage of First Nations people, persons with disabilities, visible minorities and women on the executive team in this company?
3 out of 9 (33%).
Number of jobs to be created with most recent investment round?
Since 2016, the company has grown from 40 employees to almost 200 employees today. The plan is to double the team over the next 2 years.
Number of jobs created since company inception?
The company has close to 200 employees today.
What are some of the ways the portfolio company is making an impact in the community (environmental, social, governance)?
Hopper’s CEO is very vocal about the opportunity to build a large, successful company in Canada. By supporting our winners locally, we enable the ecosystem to grow and it benefits the entire tech community.
Hopper also volunteers and contributes to a number of community service projects/initiatives. For example, they are members of TUGG (Tech Underwriting Greater Good) and volunteer at their annual Tech Gives Back day of service which supports local non-profits. Hopper also has pledged to the Upside Foundation, and has worked with them to support the Derek Smyth Memorial Foundation, which funds the SickKids oncology department, a globally known hospital for children that had a life-saving impact on the health of one of the Smyth children.
Are there any other initiatives in this portfolio company that you’d like to mention?
The company has built an incredible corporate culture. We believe that this is a critical factor in building a successful startup. The company has recruited amazing talent based on its core values: curiosity, empathy, responsibility, and openness.