A new report from Velocity Ventures, titled Innovation & Deal Flow Report 1Q2025 [Travel Services], paints a vibrant picture of the global travel services industry, particularly emphasising the opportunities and trends relevant to Southeast Asia.
According to the report, the current travel services market displays “extremely optimistic growth potential”. Notably, data protection, space travel, and social commerce are key growth areas.
This optimism is further underscored by the top three highest compound annual growth rate (CAGR) areas: data security & privacy (35.5 per cent), space tourism (31.6 per cent), and social commerce (31.7 per cent).
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Interestingly, the report highlights a growing emphasis on safety technologies for travellers, coupled with a consumer preference for data protection. This confluence suggests that travellers are increasingly mindful of their well-being and personal information when venturing abroad, presenting a potential avenue for innovative solutions in the Southeast Asian tech landscape. The report notes, “travellers are becoming increasingly cautious of their own safety when travelling, and this can be an opportunity to capitalise on”.
Furthermore, the sustained popularity of solo travelling is triggering a new wave of travel services tailored to this demographic, including specialised accommodations, connection platforms, and forums. This trend could have significant implications for startups in Southeast Asia, a region known for its diverse solo travel destinations.
However, not all areas are experiencing the same upward trajectory. The report pinpoints the top three decreases in CAGR as artificial intelligence (-18.1 per cent), influencer marketing (-13.6 per cent), and voice-based digital assistance (-2.5 per cent). While AI is still prevalent in travel tech, this decrease in CAGR might suggest a shift in its application or a recalibration of its immediate growth expectations.
The Velocity Ventures report observes a “growing emergence of personalisation and engagement in the travel industry, with consumers seeking tailored experiences.” The report also emphasises that “automation is becoming essential for driving efficiency, scalability and cost reduction”, themes that resonate strongly within the tech startup ecosystem of Southeast Asia.
The report also highlights several companies, including TravelPerk, a Spanish business travel management platform that raised US$200 million in a Series E round in January 2025 with notable investors like Atomico and EQT. Another highlighted company is Paytrack, a Brazilian software developer automating travel and expense management, which secured US$42 million in a Series B funding round in the same month with Riverwood Capital participating. While these companies are not based in Southeast Asia, their significant funding rounds indicate the continued investor appetite in the broader travel tech space.
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In terms of recent global VC activity, the report mentions K2 Space, a US-based developer of satellite buses, which raised US$110 million in February 2025. Another US company, Doifoo, developing an AI-powered travel ID, raised a pre-seed round in March 2025.
Interestingly, the report also details activity closer to home for Southeast Asian observers. A Malaysian startup developing VR sales videos for hotels secured US$1 million in a pre-seed round in February 2025, valuing the company at US$22 million pre-money.
Additionally, a Singaporean company offering real-time, self-updating digital twins for mapping systems raised US$2.5 million in a seed round in March 2025, with a pre-money valuation of US$30 million.
These deals underscore the burgeoning innovation within the region’s travel tech sector.
Velocity Ventures also highlights two proprietary deals in their pipeline: Project S25 and Project S26.
Project S25 focuses on AI-powered personalised audio tours, offering a scalable alternative to traditional guided tours. The company claims to have achieved significant cost and efficiency gains by eliminating supplier royalties and is currently fundraising US$1.5 million at a US$12.5 million pre-money valuation. The strategic rationale includes its unique AI-powered personalisation, strategic distribution partnerships, and ongoing innovation through user feedback.
Project S26 centres around spatial twin technology, providing real-time, self-updating digital mapping solutions. This platform aims to enhance operational efficiency by allowing organisations to manage their own maps and unlock new revenue streams through spatial advertising. It has diverse applications, including aviation and the MICE industries, and has even “Executed proof of concept and secured tender with Changi Airport”. The company is fundraising US$2.5 million with a US$30 million cap.
In conclusion, Velocity Ventures’ Innovation & Deal Flow Report 1Q2025 [Travel Services] offers a compelling snapshot of a dynamic, fast-evolving global travel services sector—with Southeast Asia emerging as a region ripe for disruption. With strong investor appetite, rising demand for data security, personalised experiences, and the advent of frontier technologies like spatial twins and AI-powered tours, the region’s startups are well-positioned to ride this wave of innovation.
While certain technologies, such as AI and influencer marketing, are seeing a recalibration in growth expectations, the overall outlook remains decidedly upbeat. For investors, entrepreneurs, and stakeholders in the Southeast Asian travel tech space, the message is clear: the next frontier of travel innovation is already taking shape—and the region is poised to play a leading role.
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