How much is travel actually changing?

It’s been over eighteen months since we last took a systematic look at venture capital funding in Travel and Mobility Tech. 

Our 2024 analysis zoomed in on corporate venture capital, tracking how the industry’s own incumbents (think OTAs, hotels, mobility providers) were placing their innovation bets through CVC arms, acquisitions, and joint ventures. 

This year, we’re shifting the lens back to classical VC funding trends. 

• Where are professional startup investors putting their money across the travel and mobility landscape?

• And what does that tell us about the future of our industry?

We’ve long held the conviction that “following the money” is one of the most reliable ways to read where an industry is heading. 

Why?

VC funding data reflects where the sharpest investors see market opportunity and where capital actually flows (not where conference panels say innovation is happening). 

And that distinction matters. 

• Venture capitalists are, at their core, in the business of betting on change. 
• They don’t back startups that preserve the status quo. 
• They fund the companies they believe will disrupt it. 

Every check written is a wager that something fundamental about how an industry operates is about to shift; whether that’s a new technology reaching maturity, a consumer behavior tipping over, or a regulatory landscape cracking open. 

The sectors that attract the most VC capital are, by definition, the sectors where investors see the greatest potential for transformation. And transformation is exactly what our TNMT platform is built to track. 

So the question of today’s analysis becomes straightforward:

How much is travel actually changing? 

That’s what we set out to answer in this analysis.

The bearish consensus

If you’ve been following Travel and Mobility Tech analyses outside of TNMT in recent weeks, the answer to that question seems pretty obvious: not much. 

Industry discussions on travel funding have painted a consistently bleak picture:

• “We are scraping the bottom of the barrel.” (investor blog)
• “The travel startup funding climate remained challenging throughout 2025.” (Phocuswire)
• “Travel Venture Capital is back, but only for the biggest, safest bets.” (Skift)

All of them point toward a pretty bearish status quo when it comes to change and innovation in travel.

Our own TNMT data support this notion. At least on the surface. Our dataset differs slightly from the sources above, given a more comprehensive and, in our view, more granular definition of the sector. But the top-line picture tells a familiar story. 

• Total funding into Travel and Mobility Tech startups in 2025 barely surpassed the lowest annual figures of the past decade (coming in at $13.2 billion USD in 2025). 

• And when we measure VC activity by deal count, the picture gets even more sobering: fewer than 400 deals last year, which is the lowest number since our tracking began in 2016, and roughly one-third of the record deal activity we saw in 2018.

Now, critics may rightly argue that this downturn has little to do with Travel and Mobility Tech in particular. 

For context: VC funding across industries and sectors has seen a significant slowdown since the pre-pandemic, low-interest boom that peaked around 2021. Since then, the general investment narrative has shifted fundamentally.

• Profitability has replaced hyper-growth as the dominant criterion for investors (a clear departure from the era that gave us VC-subsidized land grabs in e-scooters, food delivery, ride-hailing, and quick commerce).

• Beyond that shift in mindset, several non-sector-specific headwinds continue to weigh on startup funding in general: declining IPO volumes, more sobering M&A exit multiples, geopolitical tensions impacting global value chains, and persistent economic sluggishness across major economies that dampens consumers’ willingness to spend (including on travel).

The travel funding gap is real

So, are the critics right? Is the downturn in Travel and Mobility Tech funding simply a reflection of broader market dynamics? Not quite. 

The reality is that funding trends into Travel and Mobility Tech have been disproportionately weak compared to the wider startup ecosystem. 

• When we index total VC funding figures from 2016 and compare all-sector funding with Travel and Mobility Tech specifically, a clear funding gap emerges. 

• That gap accelerated sharply with the COVID-19 shock in 2020 and has only widened since.

The takeaway: there is less “change” happening in travel than across the broader startup landscape.

This becomes especially apparent when we look at 2025, when global VC figures staged a visible rebound, but Travel and Mobility Tech was unable to follow suit. The implication is hard to ignore. Investors have become disproportionately cautious about betting on travel disruptors; either because they struggle to identify them or because those disruptors simply don’t exist yet.

The safe bet economy 

The lack of change also shows up when we look at two additional data perspectives. 

• First, average deal sizes in Travel and Mobility Tech have grown aggressively over the past decade, reaching a new record high in 2025. 

• What that means: investors are placing fewer bets on travel startups, but the bets they do place are getting bigger. 

This is a clear sign of concentration. 

Capital is flowing toward established, well-known startups that investors have already backed in previous rounds (the familiar names, the proven operators, the safe bets).

This pattern is confirmed by a second lens: deal activity in Travel and Mobility Tech is heavily skewing toward late-stage funding. 

In 2025, more than 50% of all VC deals in the sector were late-stage rounds. 

What does that mean?

• The money isn’t going to scrappy newcomers with radical ideas. 

• It’s going to scale-ups that have been around for years, building on business models and technologies that were conceived half a decade ago or longer. 

Investors aren’t funding the next wave of disruption in travel. They’re doubling down on the last one.

A good example of this trend is Airalo, the Singaporean eSIM provider. Last year, the company made headlines after a massive $220 million USD growth investment, reportedly making it the world’s first eSIM unicorn. An impressive milestone, but hardly a signal of frontier innovation. The technology behind eSIM is anything but new. 

• It was first developed in 2012 as a connectivity standard for IoT applications, including smart home and automotive technology. 

• On the consumer front, eSIMs became widely accessible in 2017 through smartphones such as Apple’s XS and XR and Google’s Pixel 2 and 3. 

Airalo itself raised close to $2 million USD in seed funding back in 2019, targeting its eSIM offering squarely at travelers. And travel has indeed become the primary driver of adoption. According to a GSMA report, 51% of eSIM users in 2025 activated the service while traveling abroad for leisure or personal reasons.

So, Airalo’s success story is real, but it’s not a story about disruption. It’s a story about scaling an established technology to serve an already-existing consumer behavior. No new market was created. No incumbent was unseated. The opportunity was identified years ago, and the $220 million USD simply confirms that the harvest phase has arrived, not the planting season.

The AI exception: Where travel is keeping pace

So far, the data paints a discouraging picture. But there’s one area where Travel and Mobility Tech is not falling behind, and it happens to be the most consequential technology trend of our time. 

When we compare the share of AI-focused startups raising funding in Travel and Mobility Tech against the broader startup ecosystem, the funding gap we observed earlier disappears. 

• In fact, between 2020 and 2024, the share of AI-focused startups within Travel and Mobility Tech raising venture capital was consistently equal to or higher than the share across all sectors. 

• In other words: Travel and Mobility Tech has seen as much (if not more) AI funding penetration than the broader startup market.

One caveat: in 2025, Travel and Mobility Tech’s AI share dipped below the all-sector benchmark. But this is almost entirely a distortion effect driven by ultra-mega-rounds into foundational AI providers. 

• OpenAI, Scale AI, Anthropic, xAI, and Project Prometheus each raised more than $5 billion USD last year. 

• To put that in perspective: these five companies alone accounted for $84 billion, roughly 20% of total global venture capital funding in 2025. 

Strip out those outliers, and the picture rebalances.

The key message at this point is this: AI has very much arrived in the Travel and Mobility Tech context. Investors recognize AI-powered travel startups as fundable, viable, and relevant. And perhaps more importantly, the opportunity ahead remains massive because enterprise adoption of AI in travel remains in its early stages.

• According to Eurostat, enterprise use of AI technology in transportation had barely breached 10% in 2025 (roughly half the cross-industry average of 20%).

• McKinsey’s State of AI 2025 report tells a similar story: the travel and logistics industry ranks at the lower end of AI agent adoption, with around 4% of respondents reporting that AI agents are scaling or fully scaled across business functions (compared to 5.6% across all industries and 13% in the leading sector, tech).

So AI funding is flowing into travel, but actual adoption on the ground remains low. 

That’s a gap, but gaps like this are where the real opportunity lives. 

What explains the slow uptake? Several structural factors make Travel and Mobility Tech arguably a harder environment for AI to penetrate than, say, fintech or SaaS.

First, much of the industry is asset-heavy. 

• Aviation, along with hotels and ground transport, relies on long-lived, slow-to-change physical procedures, safety protocols, and regulations. 

• The need for optimization is enormous, but the path to deploying AI is anything but straightforward.

Second, travel retail is a uniquely complex ecosystem. 

• A single booking can involve an airline’s revenue management system, distribution infrastructure, private and business travel agencies, OTAs, and metasearch engines; many of them interconnected through legacy systems like PNRs, GDS platforms, and outdated merchandising standards. 

• Changing one link in that chain often means renegotiating the entire chain.

And on the consumer side, trust remains a bottleneck. Travelers may happily use AI to brainstorm itineraries or hunt for deals, but handing over actual booking authority, especially for a €2,000 package tour or a family cruise, is a different story entirely.

Finally, the digital infrastructure gap runs deep across the value chain. 

• Tours and activities are still largely booked offline. 
• Small and mid-sized hotels often still lack cloud-based systems to manage bookings. 
• Ground transport operators struggle with ops digitalization. 

And airlines, well. Where data infrastructure is limited, data silos are inevitable. And AI without accessible data is like a car without a road.

The bottom line: AI has massive potential to transform Travel and Mobility Tech. The funding is there. The investor conviction is building. But the industry’s structural complexity means adoption will be gradual, uneven, and hard-won. That’s not a reason for pessimism; it’s the reason the opportunity is still wide open.

And in two sub-sectors, that opportunity is already translating into real funding momentum and, more importantly,  commercial traction.

1. Autonomous Driving: From lab to launch

When we break down AI-focused startup funding in Travel and Mobility Tech by sub-sector, one vertical towers above the rest: ground transportation. 

Driven primarily by autonomous driving companies and their suppliers, ground transport has consistently captured between 50% and 80% of all AI-related funding dollars in the sector across the years (with significant spikes in individual years).

And those dollars are now translating into real-world disruption. 2025 was the year autonomous mobility shifted from experimentation to commercialization.

• In China, Baidu’s Apollo Go (which began operations as early as 2019) hit a major milestone, reportedly surpassing 250,000 weekly rides in October 2025. The service is concentrated in mega-cities like Wuhan and expanding into suburban districts of Shanghai and Beijing.

• In the US, Waymo launched commercially in 2024 and scaled aggressively throughout 2025, covering five cities and reporting 450,000 weekly rides by year-end. The company has announced plans to expand to more than 20 cities by the end of 2026, including international markets like London.

These real-world proof points have clearly shifted investor sentiment. In the first two months of 2026 alone, the autonomous driving space has already attracted several blockbuster rounds: 

• Another $16 billion USD into US-based Waymo.
• $1.5 billion USD into UK-based Wayve.
• $1 billion USD into Canadian Waabi (alongside a newly announced partnership with Uber).

Autonomous mobility isn’t a speculative bet anymore. It’s an emerging market with commercial traction and investor conviction to match.

2. Online Travel’s AI moment: The customer service revolution

When we look at AI-focused startup funding in Travel and Mobility Tech, not just by deal volume but by deal activity (so the number of individual deals), a different sub-sector rises to the top: online travel. 

• In 2025, up to 30% of all AI-related deals in Travel and Mobility Tech went into online travel startups (making it the largest segment by deal count, even ahead of ground transportation).

• That means more online travel-focused AI startups are attracting investor interest than in any other Travel and Mobility Tech sub-sector. 

And when you look at what those startups actually do, the reason becomes clear: customer service automation is a dominant investment theme. And for good reason, because online travel players are operating in an environment where growth is getting more expensive by the day.

Take Booking.com. According to Booking Holdings’ Q4 2025 results, the company had a strong year on the top line, with room nights up 8%, gross bookings up 12%, and revenues up 13% compared to 2024. 

But the cost side told a different story. 

• Total operating expenses increased by 15%, and adjusted fixed operating expenses rose by 10%, driven by adverse FX changes, indirect tax matters, and higher cloud computing costs. 

• Marketing expenses as a share of gross bookings also crept up, from 4.2% in Q4 2024 to 4.5%.

• Simply put: making money as an OTA is getting harder, and operational efficiency is becoming a critical lever for profitability.

This is where generative AI enters the picture, and the results are already tangible. 

• According to a recent investor call, Booking Holdings reduced customer service costs per reservation by approximately 10% through generative AI. 

• CFO Ewout Steenbergen called it remarkable to see a year-over-year decrease in customer service costs while delivering double-digit growth on both gross bookings and revenue. 

• This initiative is part of the company’s broader Transformation Program, launched in November 2024, which delivered $250 million USD in savings in FY2025, far exceeding its initial $150 million USD target.

Numbers like that explain why customer service automation is firmly on the industry’s radar. 

According to a recent survey of 86 travel executives by Skift and McKinsey, customer experience and service delivery are key focus areas for AI adoption, with nearly 30% reporting they have already implemented agentic AI or plan to within the next six months.

The funding landscape reflects this momentum. In fact, seven of the ten biggest AI startup deals in Online Travel in 2025 were for customer service-oriented companies. That’s not a coincidence. It’s a clear signal of where investors see the most immediate, scalable AI opportunity in travel.

Here’s some context on the top three companies on that list:

• Decagon positions itself as an AI concierge company, helping corporates build voice and chat agents for customer requests. In travel, the agent supports itinerary management, booking support, and loyalty programs. Clients include rental car providers Hertz and Avis, as well as travel rewards company Bilt. Decagon last raised $250 million USD in late-stage funding in January 2026.

• PolyAI, started with a strong footing in hospitality but has since expanded beyond hotels, supporting Hopper’s and Carnival Cruises’ phone-based customer operations. The company maintains a robust hotel vertical, working with properties like Peppermill Resort Spa Casino and Golden Nugget.

• GupShup, founded in 2005, is almost an incumbent in the AI customer support space. With a global presence and close to 20 offices worldwide, the company serves a diverse range of travel clients, including Oyo, Ola, MakeMyTrip, and Cleartrip, offering support across the entire customer journey from acquisition and pre-booking through to post-booking.

Now, if your reaction at this point is “autonomous driving and AI-powered customer service are interesting, but not exactly surprising”, we hear you. 

These are the visible opportunities, the ones already attracting headline-grabbing rounds and boardroom attention. 

But our analysis also uncovered three less obvious pockets of innovation in Travel and Mobility Tech. We’ll break those down in detail in our next TNMT newsletter in two weeks. Stay tuned.