Kayak Eats Sidestep – Thanks, ‘Santa Sequoia’

Some of you may recall I’ve posted a lot in the past on the topic of "Travel 2.0."  Here are my twelve posts, which must total something like 20,000 words. I still get a fair amount of traffic to those, even though most are at least a year old.  The subject of many of them was one travel company in particular…a Minnesota startup.  More on that in a bit.

Back to the main impetus for this post today: a big announcement that many of you may have missed, since it occurred over a holiday weekend — when, hopefully, most you are not online. [Sadly, your trusty blogmeister here has to be…one of the occupational hazards of being a blogger!]  Here’s the latest big Travel 2.0 announcement: Kayak.com Secures $196M in Financing Round.

That’s right — close to two hundred big ones, enabling Kayak to acquire ("merge with") fellow travel metasearch site Sidestep. Sequoia Capital led the round, which included many other existing investors in both firms, and VC superstar Mike Moritz gets a board seat. This is the largest amount of dough in one Travel 2.0 deal that I can ever remember seeing.  I thought ITA Software raising $100M in VC last year was a big deal, but this dwarfs that, all in one big, fat round.  [Interestingly, that ITA deal shares one big investor with the Kayak deal: yes, our Santa Claus friend, Sequoia. Do you get the idea they like Travel 2.0?]

It’s a bold move to elevate the combined entity into what the release labels as one the five top travel brands (by which they mean the amount of Internet traffic).  Moritz is quoted in the release as saying the deal "reshapes the largest sector in online commerce."  He’s right about the size — I’ve seen numbers saying it’s approaching $100 billion. And I was actually quite surprised to hear experts at last year’s "Travel 2.0 conference" call travel, overall, the world’s single largest industry.  So, this is big stuff — I think we have that established now…  🙂

What was the Minnesota startup I mentioned I was writing about last year?  That would be Flyspy.com, a third-generation airfare search engine — still in alpha as we speak (but be patient).
Keep you eyes open for some news from this startup. I’ve continued to stay in touch with the founder, Rob Metcalf.  No, it’s not about huge amounts of money — the business doesn’t require that now.  But it’s a significant development for a startup that’s been working on its idea for close to five years now. Let’s just say Flyspy is having a very nice Christmas.  Cheers to you. Rob!  (More on this later.)

UPDATE (12/28/07): You say you hunger for more data on this deal? And you just love charts? Boy, do I have a deal for you. You’ll get your fill here: Compete.com’s Analysis of Kayak and Sidestep Merger.