Travel Site Kayak Navigates a Merger

Score one for an East Coast tech startup. Connecticut-based travel search engine Kayak.com has raised nearly $200 million in venture capital from investors including Sequoia and Accel Partners.

With that infusion, Kayak.com then turned around and bought, Sidestep.com for $180 million in cash.

All of you who like to scoff at the East Coast tech scene, please take note: An East Coast startup just bought a Silicon Valley rival, albeit using mostly West Coast money. A harbinger of things to come?

Kayak.com's cofounder and chief technology officer, Paul English, said that "as a native Bostonian," he was "personally gratified to finally see an East Coast technology firm purchasing a West Coast counterpart."

Kayak.com indexes dozens of travel websites by price, radically simplifying the process of finding cheap airline tickets and hotel rooms. The combined company is expected to go public sometime next year.

Techcrunch's Michael Arrington has the details:

"The combined company will have 60ish employees once the merger is completed and the 60-day transition period ends. The company is very profitable on the combined revenues. In addition to affiliate fees from sales, SideStep does a large display advertising and email marketing business, which Kayak lacks. Total ticket sales for Kayak are around $2.5 billion/year. SideStep is around $1 billion."

Arrington notes the nice job done by Rob Solomon, formerly Yahoo's senior vice president of commerce, who became Sidestep's chief executive two years ago, when the company appeared to be on the ropes, and then promptly fired 80 percent of the company's staff and more than doubled its revenue to $35 million from $14 million.

Sam Gustin

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