One of the newer players in the Boston area’s travel technology sector is fueling its tank with $5 million from investors.
The new funding for Cambridge, MA-based Freebird comes from General Catalyst Partners, Accomplice, and entrepreneurs and executives from the travel industry. General Catalyst and Accomplice also led Freebird’s first round of funding, which totaled $3.5 million, in November 2015.
Freebird’s mobile tools help travelers instantly book a ticket on a new flight if their original flight gets cancelled or delayed by more than four hours, or they miss a connection. Before traveling, users pay Freebird a fee, and then when there is a flight disruption they can book a new flight on any airline for no additional cost, with just a few taps on their smartphone. Freebird covers the cost of the new ticket. The idea is to enable travelers to avoid the hassle of waiting in line at the airport or on hold with a call center to book alternate travel arrangements.
Freebird’s service currently costs consumers $19 for a one-way flight or $34 round trip. The company will increase those fees, possibly this year, says Freebird co-founder and CEO Ethan Bernstein. He declined to say what the new prices will be.
In recent months, Freebird has shifted most of its focus toward serving business travelers whose employers purchase flights through travel agencies. So far, the startup has partnerships with eight corporate travel agencies that collectively manage more than $6 billion in annual total travel purchases for their clients, many of whom have hundreds or thousands of employees who travel for work.
Although Freebird will continue offering its service directly to consumers, the startup decided to focus more on business customers because it’s easier to “reach more travelers faster,” Bernstein says. “We’re just tapping into … an enormous market and a distribution channel that’s really attractive to us,” he says.
Freebird has also found it easier to quantify and communicate its value proposition to business customers, Bernstein says. Flight disruptions aren’t just a stressful inconvenience; they also cost companies money in lost worker productivity.
“By making the entire rebooking experience more efficient for that traveler and allowing them to get what they need faster … it can actually save companies a ton of money,” Bernstein says.
Employers pay for Freebird’s rebooking services on a subscription basis. The price varies based on factors like how many employees the company wants covered by Freebird, how often they’re flying, and which airports they’re usually flying to and from, Bernstein says.
“If they’re traveling out of Chicago in the winter a whole lot, it will be a lot riskier than a company that’s based in Phoenix,” he says.
To help Freebird determine its fees, the company has software that crunches tons of data about flight prices, cancellations and delays, weather patterns, and more. The goal is to “connect dots and see what patterns exist both historically and what patterns we can predict going forward,” Bernstein says.
For employers, Freebird removes the uncertainty around booking last-minute flights, when prices can be volatile and expensive. For Freebird’s business to work, the key is smartly calculating the fees so that they’re reasonable for customers, but still high enough that the startup takes in more money than it spends on purchasing flight tickets. (Freebird keeps the fees even when travel goes off without a hitch.)
It’s still early days for Freebird, and it’s hard to tell how well the company is doing. Bernstein declined to share company financials.
The new funding will go toward product development, hiring, and forming more partnerships with corporate travel agencies, a Freebird spokesman says. The startup currently has 12 full-time employees, plus some part-time contractors and advisors. The spokesman declined to say how many employees Freebird plans to add.
Freebird has a long way to go to become another one of the Boston area’s travel tech successes. The region has produced some big winners in this sector, including TripAdvisor, Kayak, and Google-owned ITA Software. Freebird is part of a new generation of travel tech businesses with a presence in the area, along with startups like Lola and Hopper.
Bernstein, a former senior manager of corporate development at Expedia, founded Freebird in 2015 with chief technology officer Sam Zimmerman, who previously worked at PowerAdvocate, Boston Technologies, and EvoApp.
As my chat with Bernstein came to a close, I had to ask about the origins of the name Freebird.
“People usually ask if I’m a Lynyrd Skynyrd fan, and I am,” he responds. But mostly, he continues, the name “embodies what we’re about” in several ways: “free” flight tickets; getting travelers off the ground, like a bird; and the idea that in a stressful and inconvenient situation, Freebird is “the path out.”