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ToursbyLocals co-founders Dave Vincent, left, and Paul Melhus in 2015.

Handout

A fast-growing Vancouver company that has built a prosperous niche in the global travel market has raised $33-million from a U.S. private equity firm.

ToursByLocals Inc., an online marketplace that connects travellers with 4,100-plus guides in 1,000 locations globally for private tours, has received a minority investment from Austin, Tex.-based Tritium Partners, its first outside capital. The deal values the 186-person company at more than $100-million.

“This company has great momentum,” said Tritium partner Brett Shobe. “It should be a very exciting ride.”

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The service is essentially an Uber for travellers seeking experiences off the beaten path, with local guides giving customized half-day or day-long tour of their cities for small groups. Away from the hordes, they offering insights and interactions with locals. Art history majors take customers around famous art museums, while others lead genealogy tours for descendants of immigrants retracing their roots.

Tour prices average $678, varying by market. “We’re not for people who have price on the top of their list of considerations,” said chief executive officer and co-founder Paul Melhus, adding the average customer is 60 years old and has a household income of US$200,000. About two-thirds are American.

“It’s an older demographic. They’re pretty affluent people, typically more sophisticated travellers and fully independent. ... They don’t want to spend money on things, but experience."

Thirty per cent of the business is from repeat customers – one Florida couple has taken 83 tours. Mr. Melhus said ToursByLocals follows up with every customer who gives a rating of four stars or less. Employees in Vancouver, Buenos Aires, Glasgow and Kuala Lumpur offer 24-hour support for customers and guides. “They’ve done a great job addressing the needs on both sides. ... That’s positioned them well in a niche growing market,” Mr. Shobe said.

The idea for ToursByLocals came during a 2006 trip to the Great Wall of China by Mr. Melhus and his partner and co-founder, Dave Vincent, the company’s chief technology officer. The couple wanted to avoid bus tours and when they arrived, two women offered them an engaging and informative talk – then hawked souvenirs at them. It was awkward and “unfulfilling,” and the travellers bought things they didn’t want, Mr. Melhus said.

While that scenario is familiar to many world travellers, the pair, who had met in 1982 at McGill University and then built an education-software company together, saw a business opportunity providing a reliable, trustworthy and simple platform that connected tourists with vetted local guides, who could provide more intimate, personalized and unique experiences – leaving everyone happier. “We spend a lot of time upfront making sure every guide is high quality and will give a desirable experience for our travellers,” Mr. Melhus said.

In the fall of 2008 they began recruiting guides and sold 79 tours in 2009, an amount that topped 105,000 by 2019. The company keeps 20 per cent of gross sales, which were $70-million in its past fiscal year and have been rising by about 40 per cent annually. One early guide, Luciano Bullorsky of Buenos Aires, is now president.

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Mr. Shobe said ToursByLocals has tapped into several trends, including growing demand for customized and authentic experiences, and use of online tools. He said Tritium will help recruit seasoned executives and guides and expand marketing.

Mr. Melhus said the founders decided to seek outside private funding after years of unsolicited entreaties, but weren’t interested in selling out. Tritium, which was content to buy a non-controlling stake, “was in the spot we were looking for,” he said.

The co-founders are receiving an unspecified portion of the financing for part of their stakes. But Mr. Melhus, 66, said he and Mr. Vincent, 59, have no plans to retire any time soon. “It’s too much fun. We don’t have any particular interest in riding off into the sunset at this point. We want to see what the company can become.”

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