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Hopper’s business is now built around a mobile-only offering it claims can predict, with 95-per-cent accuracy, when travellers should buy air tickets to secure the lowest prices.John Lehmann/The Globe and Mail

Frederic Lalonde was struggling to make something of his Montreal startup Hopper Inc. when he got an unexpected boost from an unlikely source: a New York Times travel columnist.

Using Hopper's research engine – a side feature to its business of helping travellers buy trips online – writer Seth Kugel discovered it was cheaper to book flights on Thursdays than weekends, to fly on Wednesdays instead of Sundays and to detour via Lisbon rather than fly direct to Paris.

"Pop in any route, and get a customized report with the cheapest day to book, the cheapest day to fly, average costs and … how much you can expect to save," Mr. Kugel wrote in May, 2014. Within weeks, a million users flocked to Hopper's website.

Mr. Lalonde hadn't realized Hopper's vast trove of data – trillions of airfare quotes researched online over five-plus years, obtained from global transaction systems such as Sabre – "was so deep and so broad that we were able to predict the future with it," he said. But after seven tough years Mr. Lalonde knew what he had to do: change course.

The move has worked: on Thursday Hopper is announcing it has secured an $82-million venture capital financing deal led by the Caisse de dépôt et placement du Québec and backed by prior investors including Brightspark Ventures, Accomplice, OMERS, Investment Québec, and BDC Capital.

It's the eighth tech venture deal in Canada of 2016 to exceed $75-million – up from one in 2015 – amid the best year for early-stage tech financings in Canada since 2001. It's also the third large-scale venture deal to be led by the Caisse in the past 15 months as the Quebec giant increases focus on funding emerging Canadian tech superstars.

Hopper's business is now built around a mobile-only offering it claims can predict, with 95-per-cent accuracy, when travellers should buy air tickets to secure the lowest prices. "If you're actually observing [trillions of price quotes] over several years, you can have a good idea of what is going to happen to the airfare pricing before it actually happens," Mr. Lalonde said.

App users are more often than not told by Hopper they shouldn't buy a ticket for an intended trip, but wait. The app notifies users monitoring flights – about three million at present – when prices drop. When it's time to buy, Hopper, a registered travel agency, handles the transaction for a small fee.

Hopper is one of several airfare prediction sites that have sprung up to address widespread traveller anxiety about overpaying for flights, given that airlines regularly change prices, while charging punitive fees to change bookings. It has been widely heralded as one of the best mobile travel apps by a spate of publications and named a top 10 mobile app by both Apple and Google. It has expanded its user base tenfold this year, to 10 million users, and it now sells $1-million worth of flights a day. Hopper will exceed $5-million in revenue for 2016, with a forecast to more than triple sales in 2017. "The metrics have been absolutely phenomenal over the last 15 months," said Thomas Birch, the Caisse's senior director of fund management.

Mr. Lalonde, 43, co-founded Hopper in 2007 after serving as a vice-president with Expedia, which had purchased his first startup five years earlier. He intended to create a data-driven system to "discover" and suggest trips for vacationers.

But after spending five years and $12-million, Mr. Lalonde was discouraged by his lack of progress. The company was early to the "Big Data" craze and its attempt to harness the power of natural-language search was disappointing. "There's a reason Google is the only one that's good at that. You need a very large user base giving you a lot of signals to build natural language search. And obviously as a startup it's almost impossible." At one point, he even offered to reimburse his investors and call it a day. They encouraged him to continue.

Mr. Lalonde didn't realize how much pent-up demand there was for a best-price flight search tool he had built into his system until the Times story ran. "If you understand what it is to build startups … this is the most exhilarating moment," he said. "As long as you're ... willing to just run where the market is pulling you, it's such a powerful force."

He shut Hopper's website business to go mobile only, focusing only on air tickets to start. The surge of demand after the app launches in 2015 has him focused on opening travel agencies in 100 countries in the next two years. Hopper is also working to add features to take advantage of its rare advantage in today's big data-crazed world: knowing what people will buy before they actually transact. "The opportunity for Hopper to monetize that intent data is enormous," said Damien Steel, managing director with OMERS Ventures. "Think of anything that you purchase post-purchasing your flight, and pull that forward, whether hotel bookings, travel insurance, etc. … They have not yet started to capitalize on that."


Top 10 announced technology/biotechnology venture-capital deals in Canada to date, 2016

1. BlueRock Therapeutics, drug development, Toronto, $295.3-million

2. Thalmic Labs Inc., wearable technology, Kitchener, $158.4-million

3. DalCor Pharmaceuticals Inc., drug developments, Montreal, $126.7-million

4. Real Matters Inc., property information services, Markham, $100-million

5. Hopper Inc., online travel service, Montreal, $82-million

6. Triotech Amusement Inc., entertainment devices, Montreal, $80-million

7. Zymeworks Inc., biotherapies, Vancouver, $78.1-million

8. Blockstream Corp., cryptocurrencies, Montreal, $75.8-million

9. Flipp Corp., mobile consumer marketplace, Toronto, $63.7-million

10. Farmers Edge Inc., agriculture technology, Winnipeg, $58-million

Source: Reuters and company news releases

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