Transavia believes that, just like flying, entrepreneurship should be for everyone. The low-cost carrier recently launched Transavia Ventures as a means to drive innovation at the airline and grow the early-stage startup ecosystem.
As airlines strive to drive innovation and get closer to the pulse of technology, a growing trend has emerged. Numerous airlines have launched their own venture arms. The likes of JetBlue (which we previously profiled here at Kambr Media), Lufthansa, El Al, AirAsia, and Qantas have all dipped their toes in the water.
The latest entrant into the field is low-cost carrier Transavia. With the recent launch of Transavia Ventures, the airline aims to work with emerging technologies beyond those that impact its daily operations in order to drive innovation and foster new learnings, while shepherding the early-stage startup ecosystem.
Transavia has always operated under the principle that flying is for everyone. They now wish to apply this thinking to fledgling companies to make business and entrepreneurship accessible to more people.
Kambr Media recently caught up with Nico Gielen, Transavia Ventures, Investment Lead New Business, to learn about the new investment fund.
Kambr Media: What did you do before and how did you get involved with Transavia Ventures?
Nico Gielen: I was an entrepreneur at my own company for 14 years. I sold my company in 2014 – it was a company in the video communications area. After I sold my company, I was part of an investment fund made up of 20 angel investors. We invested in all kinds of startups with a very broad scope from pharmaceuticals to mobile to apps.
I did it for four years and it was fun. I learned all about investing. But it was an investment fund which didn’t have a very clear scope. Then I came in contact with Transavia a couple of months ago and they asked me to set up the investment fund they already had planned for a couple of years. I started here two months ago. My goal is to set up the funds, to manage the funds and to introduce Transavia to the investing world.
Where did the idea come from for Transavia to start a ventures arm?
Obviously, Transavia is well known as an airline, having a long history in innovation. As part of that, we’ve had our own innovation team for several years, with the focus to make operations better. Because of this, the team was already in contact with new innovations and new startups who are helping improve operations.
Transavia also came into contact with emerging technologies, which didn’t have an impact on day-to-day operations, but saw their potential. Therefore, there was this thought of how can we still have a link to these new emerging technologies? We can do that by creating an investment fund so that we can have active partnerships with those new startups by participating in it, but also by helping them with the knowledge and the expertise, which is around in this company.
That was one reason, and the other is to generate additional revenue streams, so there's a return on investment. It is an investment fund within the end goal of making profit.
Did you take a look at what other airlines such as JetBlue, Lufthansa, and Qantas are doing in the venture space?
Yes, in a very broad sense, I'm aware. For example, I'm visiting Cockpit, which is a venture initiative of El Al, which Lufthansa is also a part of. I'll go there in July to learn from them. And of course, Transavia is owned by KLM, and KLM have their own investment funds –The Mainport Innovation Funds.
We don't participate in their funds, but we offer them, now and then, pilot areas. So if they have ventures that they want to have a trial or a pilot at an airline, and it can't be KLM then it could be Transavia. So we are very closely related to Mainport Innovation Funds, but we don't actively participate in it.
Is there a specific type of startup or technology that you guys are focused on investing in?
Not a particular type per se, but of course emerging technologies are very interesting, like artificial intelligence, machine learning, deep learning, block chain. Those are technologies we are very much interested in, so that is a specific focus. And if you look beyond technologies to markets, then it doesn't have to be airlines, but that connection is of course fine. Areas such as mobility, logistics, transportation, travel, but also revenue management, pricing, things like that are interesting for us, so that we can make use of the expertise which is inside Transavia.
And do you have any kind of geographic focus? Are you also looking to invest in startups outside of the Netherlands or even Europe?
We are already in contact, for example, with startups in Croatia, Finland and in the U.S., so yes, we are also looking outside of the Netherlands. But of course, Transavia is typically a Dutch and a French brand, so our first focus is the Netherlands. Because in the Netherlands everybody knows Transavia, so that makes life easier.
Is there anything you can speak to about the traction so far with Transavia Ventures? maybe how many applications you're getting or how many companies you're looking at? How big the fund is?
The fund is one million Euros a year. That's Transavia’s investment in this initial fund, which will be spread over a few startups. So that means that we are looking at ticket sizes between 100 and 250 -- that's the ticket size we are aiming for. That's the startup phase we are aiming for – pre-seed companies are the ones we can actually help, and that's important for us. That's the investment fund for the first year in which we have to learn from and build up over time.
Beyond investment rounds, Does Transavia Ventures have any community engagement initiatives planned such as hack-a-thons or pitch competitions?
We are in the middle of asking organizations “What are your concrete business challenges?” We want to collect those challenges, and then share them with the startup ecosystem, asking them for solutions and then we organize a challenge. That will not happen on the very short term because we first want to have some actual full participants in our fund. That way people can get familiar with us and what we’re all about. If a company comes with a challenge with a request for proposal, we take the time to actually work with them.
If I were a startup and I wanted to pitch to Transavia Ventures, what would be the best way to do that?
As mentioned, we are focusing on pre-seed. Beyond that, what is very important is the team. What is the team of the startup? Because if you are aiming at pre-seed phase, you know that you have to test and validate the product before you actually can have a successful business. You know that the product of today will not be the solution of tomorrow, so the product is not the important part. It's more about the team.
Is the team young and energetic? Are they committed? Have they invested some of their own money into the company? Those are very important things. Are they coachable? Because we can offer a lot of expertise, but are they willing to receive this guidance? Are they willing to operate as a team? And, of course, is the solution scalable? In the end, we want to make profit, so is it a scalable solution that they are offering?
When it is all said and done, what would make Transavia Ventures a success? Do you have any KPIs?
Yeah, it is a success, first of all, when there is enough profit and a return on our investment. When that is at a certain scale and we learn from the startups we invest in, we want to take what we learn from these emerging technologies and apply it to Transavia. So, that is also a success factor.
Of course, it is difficult to define in a KPI, but this is important – if what we learn and add something to the company, to our process. That is more of a KPI for the innovation team, but it is also a side effect of Ventures. And if they can help us with some new business challenges, for example, sustainability.
Sustainability is a real challenge, specifically for airlines. That is a challenge, and there are a lot of initiatives by startups in that field, which of course are very attractive to us.
What is your feeling about the Dutch startup scene?
It's very much alive. It's certainly here in Amsterdam, but also in Rotterdam, Delft, around Eindhoven, around the universities. There is a lot of expertise around those universities. A lot of students who have the guts to start their own business. And there is, of course, a lot of money available in the market so that helps.
It is a very lively atmosphere. I think that startups are doing very well. There are a lot of startups. Maybe ambition is not always high enough to reach the scale-up level. But, yeah, it is very energetic. Of course, there is also another side there.
There are a lot of startups where it is more of a way of living than starting a real company. But it’s my goal as an experienced entrepreneur to sort through this. Do you want to live the life of a startup, or do you want to really build a startup? That's two separate things. Of course, there are a lot of people who think it is a way of life. They live from funding to funding to funding – and that's our goal, to close them out.
What are some technologies that you are most excited about?
Artificial intelligence is what excites me most. There are almost unlimited possibilities for it. Even more, virtual reality. That's so cool. That is also going to change the world; how we are going to train people. This morning I had a demonstration of the use of virtual reality for coaching – it's great!
What’s one area within commercial aviation that you think can be improved with technology?
Transavia is a low-cost carrier, so we are not very fond of raising the cost of tickets because then flying is only for the rich, and that is not the way to go. Flying is for everybody, so innovation will be the solution to create sustainable airlines and keep costs down.
And are you applying this same inclusion philosophy to your venture fund?
Yeah, I think that Transavia Ventures is very much in line with the principles of Transavia which is low-cost, feel good. That's how we are actually looking at startups. Not with a very high-cost funding need, but with low-cost startups that really want to create a company from the bottom up. And that feels good.