Behind the Investment: Canary Technologies – Bringing Hotels into the 21st Century

Every day our lives are becoming more efficient and seamless through technology – we can tap a few buttons and meals & groceries appear magically on our doorsteps, we can summon a car to take us to and from wherever we please, we can control the lighting, temperature, etc. of our homes from the palm of our hands thanks to “smart home” IoT devices. Wherever we look, everything is becoming more connected and automated in our personal lives. As a result, businesses are scrambling to keep up with the pace of innovation, leading to the “consumerization of B2B software” – simply put, we expect the simplicity and superior UI/UX of our consumer applications in our place of work or wherever we interact with businesses.

In contrast, the hotel industry has been dominated by legacy software called PMS systems (“Property Management Systems”) and payment processors to manage back-office/day-to-day operations and to facilitate payments, respectively. Many of the “leading” solutions in the PMS space were built 20+ years ago(!) and have primarily focused on backend functionality for hotels. The “frontend” of hotels has historically been overlooked as purpose-built solutions to manage, enhance, and automate the guest experience simply weren’t prioritized, and that’s where Canary comes in.

From the start, Canary has taken an integration-first approach, connecting deeply into the PMS systems and payment processors to minimize disruption for their customers’ workflows, while tackling a major problem for hotels and their end users – digital authorizations & contracting. With Canary, customers no longer need to present a physical card or sign physical stacks of paper to authorize payments or contract with a hotel for their stay, and hotels don’t have to fax/email around authorizations in a non-compliant way or risk an employee leaving sensitive PII (“Personal Identifiable Information”) laying around that could be stolen. With their Digital Auth solution, Canary validates credit cards for hoteliers, helping drive down fraud and chargebacks while unlocking a digital experience for guests:

• “We did offer the service, but it was a fax or an email. Anyone could fill out that form – there was no guarantee that someone didn’t steal the card. The nice thing about Canary is that you don’t have to be in front of a computer and they can sign with their finger. Canary was protecting us as a business – making sure that the card wasn’t stolen” – International Hotel Franchise
• “The major return on investment is the secure validation of the cardholder…it protects us (being the hotel) to make sure that the payment is secure” – International Hotel Franchise

Next, Canary empowered hotels with a seamless end-to-end guest experience through their Guest Management Suite, enabling contactless check-in, guest messaging, dynamic upsells, digital tipping, and contactless checkout while unlocking significant time-savings, cost-savings, and revenue acceleration ROI:

• “It pays for itself in terms of the add-ons that we’re able to push to the customers and allow them to opt in for…[We get] 1.5-2x as much in transactions as what we pay for Canary.” – Boutique Hotel Franchise
• “The price of Canary is less than what we would have had in chargebacks in a year, even if it was a low year, not to mention the time saving as well and the availability to take reservations that we wouldn’t normally be able to because people don’t have access to a printer …I’d say what we pay for Canary, we save probably double that.” – International Hotel Franchise

As for the genesis of the partnership between Insight Partners & Canary Technologies, the company first came on our radar way back in September 2018 after participating in Y-Combinator. In the years following, we consistently reached out to Harman & SJ to start building the relationship but they were heads down building; we didn’t give up and kept knocking. Ultimately, our friends at F-Prime (Gaurav Tuli) ended up leading a $15M Series A announced in February 2022, and shortly thereafter introduced us to Harman in March 2022 – nearly 3.5 years after our initial outreach (and after a global pandemic rattled the entire travel industry!).

We could not be more thrilled to be leading Canary’s $30M Series B with participation from F-Prime, Y-Combinator, Thayer Ventures, and Commerce Ventures. Now, post-investment we remain eager to scale up Canary’s durable business & accelerating commercialization, and to double down on Harman and SJ’s vision to build a cloud-native, full suite of purpose-built software for hoteliers.

Julian Marcu Vice President More By The Author