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Flightfox accepted into Y Combinator after snagging $800,000

Thursday, 31 May 2012 | By Michelle Hammond

Australian travel start-up Flightfox has been accepted into US-based incubator Y Combinator and raised $800,000 in capital, just months after joining Startmate, the Sydney accelerator.


Flightfox, founded by Lauren McLeod and Todd Sullivan, connects a global network of flight booking experts with those seeking flights.


Unlike travel agents, who earn commissions from travel providers, Flightfox experts are paid a flat fee by the traveller, and only when they find them the best deal.


Flightfox was among the latest round of companies accepted into mentor-driven seed fund Startmate, but moved to the United States within three months of becoming incorporated there.


It has now been accepted into Y Combinator, a prestigious start-up incubator in Silicon Valley, which has hosted other Australian start-ups including Nikki Durkin’s 99dresses.


The news comes after Flightfox raised $800,000 in funding in San Francisco, although half of that amount came from Australian investors such as Mick Liubinskas from Pollenizer.


Despite its early success in the US, Startmate co-founder Niki Scevak says he is confident Flightfox will return to Australia in some sort of capacity.


“Silicon Valley remains the central station for start-ups, and Lauren and Todd’s decision to use that to their full advantage makes sense,” Scevak says.


“Also, I think it’s a lot more complicated than just going to the US or staying in Australia, so I think they’ll be back and forth... It’s not either or.”


Scevak says rather than feeling guilty about venturing to the United States, Australian start-ups simply have a strong allegiance to their home country.


“In my experience, they always end up back in Australia,” he says.


According to Scevak, Flightfox was a standout from the beginning, mainly because of its unwavering focus on the customer.


“They were very metrics-driven and extremely focused on the customer. They had an initial version [of the service] up within a few weeks,” he says.


“Their one guiding light has been the customer and their passion for the customer... At the same time, they’re just getting started.”


“Now they have some capital in place, they can put some more people in place. There are more opportunities, but it’s very much the beginning of the journey.”


According to McLeod, who previously created and sold travel site Globetrooper, the idea for Flightfox came to her while she was travelling in Bolivia.


“I envisaged flight experts all over the world competing against one another to find me the absolute best flight,” McLeod told The Age.


“They’d use industry software, local offers, and tricks of the trade to uncover the lowest prices.”


McLeod said the decision to venture to the US is “not about the money”.


“It’s not about a labor shortage, and it certainly isn’t about access to foreign markets,” she said.


“Instead, this supposed ‘brain drain’ is all about Silicon Valley having the richest and most meritocratic start-up culture on the planet.”


“If you care at all about tech start-ups, it just makes sense to spend time here. Imagine learning French and never travelling to France.”