Former Fisher and Paykel chief operating officer Andrew Paykel has launched a new lay-by travel startup with nearly $1 million in funding after leaving the family business to go it alone.
LayAway offers travel packages on lay-by for up to 24 months, with customers able to pay for the trips in weekly, fortnightly or monthly payments with no deposit or interest.
Paykel left the appliance manufacturing giant 18 months ago to begin building the startup, which officially launched this week.
“I had 20 wonderful years of corporate life with Fisher & Paykel and I got a huge amount of experience through that,” Paykel tells StartupSmart.
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“I got to a stage in my life where I felt that I wanted to go out and take another path. I was ready for a new challenge and wanted to build my own little business.
“I saw an opening in the travel space for this lay-by approach – it’s a huge market and it’s very emotive. Everyone wants to travel but sometimes they don’t have that money upfront to be able to do that.”
Paykel says LayAway is targeted at families with young children, retirees and school and sporting groups, with pre-packaged and design-your-own trips on offer.
“Unlike a conventional travel agency where you need to part with a significant amount of money upfront, customers and families have the ability, with a little forward planning, to book and pay for it up to 24 months in advance,” he says.
“That enables people to manage their finances and household budget. It’s a huge asset to people when cashflow is king.”
A basic package from LayAway includes airfares, accommodation and transfers, and users are able to add auxiliaries including theme parks and extra spending money to be put aside.
Paykel says that a trip to the US could cost as little as $2.95 per day per person across a 24-month period, and the startup has launched with 250 locations on offer.
He says feedback from customers so far has been overwhelmingly positive.
“We’re excited to be getting that feedback from the market, that’s what’s charging us,” Paykel says.
“Lots of families out there want to travel but haven’t had a way in the past. Now we’re offering that a solution to work within a household’s budget.”
He says LayAway has developed specialised IP and is the only company in Australia offering this specific lay-by model to the travel market.
“No-one is doing what we’re doing at the moment as far as having a very automated site,” he says.
“We have a lot of nice features and functions on the site that we don’t see anyone offering at the moment. We’re removing the barriers that were up there in the past.”
A funding runway
To facilitate the growth of the company and provide runway post-launch, Paykel raised nearly $1 million in funding for the startup.
The funding comes from LayAway director Peter Russell, a strategic group of investors and Paykel himself.
“It’s an exciting model and that attracted some strategic investors to the business,” he says.
“They come from the financial, advertising and travel sectors, and that funding ensures the viability of the business, allows to build the brand and helps us expand in a much quicker way than we could have otherwise.
“This helps us with having a steeper growth curve.”
The funding will help the startup get through the initial two-year delay in revenue that is inherent in its business model, with LayAway not taking any funds until the end of a payment plan.
“It’s something we have budgeted for and is part of our model,” Paykel says.
“That may have prohibited others from entering the space but we have investors to help with those first couple of years. Once you get through the first two years there are significant upsides as you grow the business.”
After two decades of corporate life, Paykel says having responsibility across an entire business’s operations and its six-person team is refreshing.
“When you have your own business you certainly know you’re alive,” he says.
“You’re very much accountable and responsible for every ticking moment in the business.
“When you’re in a large corporate there are a lot of people around you but when you’re in a smaller environment you’re very much intermittently involved in every aspect of the business, every minute of the day.”
This article was first published by StartupSmart.