Start up, sell, buy back - Going full circle

June 21, 2021

While other businesses battened down the hatches, Locomote co-founders Ross and David Fastuca grabbed a golden opportunity to get back into the travel industry – by buying back their own company.

They may not have starred in their own Netflix comedy like Adam Sandler and David Spade, but Melbourne cousins Ross and David Fastuca are set to enjoy a similar ‘Do Over’.

The cousins hit the big time in 2016 when their software business Locomote was acquired by Travelport, a publicly listed (NYSE), UK-based technology provider to the global travel industry.

Launched in 2012, Locomote morphed rapidly from a start-up to a homegrown high-tech success story with a staff of 120 as its platform for streamlining business travel booking and approval found a ready market at the top end of town.

Post-sale, Ross and David worked for Locomote’s new owners for two years before leaving to spend quality time with their young families and pursue other ventures.

“After we finished up at Travelport in August 2018, we gave ourselves a couple of years to think about what was next, then we thought we’d dive back into something serious,” Ross says. “David and I have been in business together since high school – nearly 20 years – and we felt we were too young not to have a crack at something else.”

Back to the future

Then, in mid-2019, following its acquisition by private equity investors Siris Capital Group and Evergreen Coast Capital, Travelport began divesting non-core assets and approached the pair, to see if they might be interested in bidding to buy their baby back.

Their answer was a qualified “yes”.

“We always knew we’d return to the corporate travel industry in some way, shape or form, once our non-compete clause expired,” David says. “Although we didn’t necessarily think it would be quite so soon, or with Locomote!”

The cousins were preparing their proposal in early 2020 when the pandemic struck. After hitting pause for a couple of months, they opted to press ahead and, on 1 July 2020, signed a deal to acquire the business, for what they describe as “a serious COVID discount”.

Despite the damage wrought by the virus and ongoing uncertainty about when international travel will recommence in earnest, Ross and David foresee a strong long-term future for the travel sector and they’re gearing up to take advantage.

Preparing for take-off

While domestic travel is picking up steadily in Australia, the Fastucas aren’t expecting business travellers to take to the international skies again en masse until 2023 or 2024. However, their research suggests the market will eventually revert to at least 70 or 80 per cent of pre-COVID activity.

“People have worked out that they can do more digitally, so we think there’ll be less same-day travel and more rigorous planning and approval of business trips, events and bigger gatherings,” Ross says. “We believe companies will invest in fewer, but longer, business trips. The total spend won’t necessarily be that much lower because staying longer will mean spending more.”

Once companies have enough confidence the virus is under control that they’re comfortable allowing employees to travel abroad, they’ll be in the market for digital tools to help them manage the process efficiently and safely, he predicts.

“While David and I were considering whether to go ahead with the Locomote buy-back, we were approached by some major travel companies, asking us to advise them about building some technology that sounded very similar to Locomote’s,” Ross reveals.

“The message we had from them was that the value proposition the platform has to offer is going to be super important coming out of COVID, because companies will no longer be able to let people book corporate travel on a whim. Every trip will have to be planned, documented, justified and risk assessed before it’s approved.

“That’s where Locomote’s strength lies – in building those customised workflows for customers. Whether you’re a small enterprise that spends $20,000 a year on travel or a multinational that spends $100 million, we’re creating technology that allows you to manage the process with rigour but at the same time providing a great and simple experience for all involved.”

Getting the band back together

Since January 2021, when they reassumed operational control of Locomote, the Fastucas have begun reassembling their core team. The majority are former employees keen to jump back on board. Notable among them are previous technical leaders – chief technology officer Mario Rogic and senior software engineers and solution architects Ben Kitzelman and Arek Wrzos – who have all taken an equity stake.

“We had such a great culture in Locomote,” Ross says. “It’s so incredible to hear people wanting to come back to continue what we started. It means we can hit the ground running with experienced and unbelievably talented people who deeply understand the vision of Locomote.”

Sales and marketing have been ramped up and several dozen new customers have signed on, from the Asia Pacific region and further afield.

The cousins are also raising additional capital to further fuel the growth of the company and are looking for external investors who share their enthusiasm and are willing to back their vision – to see Locomote Mark 2 become one of the biggest technology-led travel companies in the world.

“While most of the industry has focused on cutting costs and putting things on hold over the past year, we’re investing in our product so we can go forward as the market picks up,” David says.

And, after a couple of years out of the industry , the cousins are revelling in their own return to the cut and thrust of the travel world and relishing the challenge that lies ahead – repeating Locomote’s first round success.

“As an entrepreneur, you tend to look for the upside although, of course, you need to take the emotion out of your decision-making and have a plan for what you want to achieve,” Ross says. “As a team, we have done that and we’re excited about the opportunity. As with any business, there’s an element of risk but there’s also the prospect of enormous growth, and we know this space inside out.”

This article originally appeared on NAB Business Review

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