LONDON — When Arnaud Bertrand helped found HouseTrip, a vacation rental website, in 2009, his goal was to build a rival in Europe to Airbnb, which was then a year-old start-up.
From offices in central London — equipped with game tables and colorful photos of European cities — HouseTrip quickly raised almost $60 million from private investors, expanded to more than 30 countries and hired over 100 people, from London to Lisbon. The aim was to connect travelers with people looking to rent out their homes.
“The focus from Day 1 has been Europe,” said Mr. Bertrand, 30.
But over the last six years, HouseTrip has found itself in an increasing struggle to compete with Airbnb, which has become the global leader in short-term rentals. And like many other European start-ups trying to compete against bigger American rivals with international ambitions, HouseTrip is having to adapt its business model. It is now trying to mine smaller markets, rather than compete head-on.
There might be any number of explanations for Airbnb’s rapid ascent — management prowess, savvy marketing or a better stable of available properties. But there has been one clear, made-in-the U.S.A. advantage: funding, and lots of it.
Venture capital funding in Europe was up sharply last year, but the amount raised was far less than the level in the United States.
VENTURE FUNDING FOR START-UPS
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“If you’ve got a business that works, you have to go global as quickly as possible,” said Ben Holmes, a partner at Index Ventures, which has backed the likes of San Francisco-based Dropbox, the file-sharing service now valued at about $10 billion.
But for Florian Meissner, a German entrepreneur, trying to duplicate the offering of a big American rival was never the idea. EyeEm, a Berlin-based mobile photo app that he helped found, works similarly to Instagram, but is aimed at a narrower audience.
As Mr. Meissner sees it, Instagram, which was acquired by Facebook for $1 billion in 2012, is a service people use to upload photos from their children’s birthday parties. EyeEm, which started in 2011, has tailored its app for serious photographers, who want to share professional-quality photos on their smartphones.
The opportunity is certainly smaller. EyeEm says its user numbers are only about one-twentieth the size of Instagram’s 300 million global users. But by focusing on a niche, Mr. Meissner says the German start-up has built a loyal following among photo-savvy users and avoided becoming a mere Instagram copycat.
EyeEm’s high-quality images also led to a deal with Getty Images last year in which people’s smartphone photos were included in the company’s collection of stock images. EyeEm, which now employs a total of 55 people — divided between Berlin and San Francisco — takes a percentage of the royalty paid for each image used.
“We would never have tried to build something similar to Instagram,” said Mr. Meissner, adding that most European start-ups will find it hard to compete directly with better-financed American rivals. “If you are running a taxi app in Austria, I would just stop,” he said. “Uber is coming after you.”
