RedBeat Ventures, the digital venture arm of budget airline AirAsia, on Monday announced the launch of a new venture capital fund.
Called RedBeat Capital, the fund will target post-seed stage startups seeking to enter or expand their presence in Southeast Asia, with a particular focus on travel and lifestyle, logistics, and fintech.
Though initial reports stated the fund size was $60 million, Fernandes says that figure is false, and it will be “as big as we think we need it to be.” The VC fund will also operate independently and is raising capital from external investors, as first reported by DEALSTREETASIA.
He says about $10 to $12 million has already been invested so far, and any investments already made will be transferred to RedBeat Capital. He adds the fund’s average check size has varied from $1 million to $5 million.
“AirAsia and RedBeat Capital are on the lookout for the world’s best and brightest to help us develop a travel technology ecosystem. What better place to start than right here in San Francisco,” Fernandes said in a statement.
RedBeat Capital has partnered with San Francisco-based venture capital firm 500 Startups to gain access to its deal flow, and its accelerator programme graduates and ideas. 500 Startups has more than 2,200 companies in its portfolio, including messaging and ride-hailing apps with 10 unicorns including Grab.
Led by RedBeat Ventures CEO and AirAsia Group Deputy CEO (Technology and Digital) Aireen Omar, the venture capital fund’s launch is another move to facilitate the company’s transformation from a low-cost carrier into a travel technology company.
AirAsia’s leaders said they want to see the airline transformed into a powerful “travel technology company.”
“We intend to operationalise this year, working with Christine [Tsai] and her team to identify and invest in startups that are willing to grow and expand, particularly into Southeast Asia where we have the network, data and regional expertise to help accelerate their business,” Fernandes added.
Fernandes said AirAsia will go beyond selling tickets at a level no other airline has done before. He hinted at new voice and facial recognition technologies, as well as ventures that could help lower costs: predicting maintenance needs, for example, or helping pilots avoid bad weather and, as a result, save fuel.
“The idea is that deals that come to AirAsia would benefit from our data, benefit from our knowledge of the market and give these startups the ability to build their business in what I think is a very exciting part of the world,” Fernandes says. He says there are three types of ventures RedBeat Capital will look at: ventures that will use AirAsia’s database to generate revenue, ventures that will help AirAsia reduce cost and ventures that will improve AirAsia’s product and customer experience. Fernandes says it has already invested in a “well-known” voice company to address the latter point.
RedBeat Ventures oversees AirAsia’s digital lifestyle brands BIGLIFE, AirAsia BIG Loyalty, travel360.com, Vidi, BigPay, RedCargo Logistics, RedBox, ROKKI and OURSHOP.
AirAsia started in 2001 with just two planes, but has grown to a fleet of more than 200 today. It flies to more than 140 cities and now carries more than 90 million passengers a year. Fernandes said that number is expected to hit 100 million in 2019.
As Skift reported earlier this month, the airline’s website has already become a robust digital travel marketplace, offering travelers the ability to make ancillary purchases such as private tours and transfers; hotel bookings through Expedia-powered AirAsiaGo, and lifestyle products (think: bottles of whisky and travel adaptors) delivered on board — in addition to AirAsia flight tickets.
The airline is also investing in technologies that may bolster its existing loyalty program, BIG Loyalty. Eventually, Fernandes said that AirAsia may “tokenize the points.”
It’s too soon to say whether AirAsia’s new business ventures will have much, if any, impact on travelers. (Perhaps, on a future AirAsia flight, you’ll be to board using facial recognition and enjoy inflight messaging through Twilio.) But it will certainly help the airline diversify its balance sheet and maybe stave off the troubles that low-cost carriers are experiencing in Europe, forcing them to scrounge desperately for cash.
Many corporations have jumped on the trend of fraternizing with startup founders in various ways, but sometimes with mixed results.
“Some corporations are quite savvy, but others are hazy about their objectives and struggle to engage with the startups and also overcome the culture gap between a small company and a large one,” said Christine Tsai, CEO of 500 Startups. AirAsia is following a bit of an airline-specific trend here, too, as carriers like JetBlue, EasyJet, El Al, and Qantas have experimented with investing in startups to various degrees. Some look strategically for companies that might boost their revenue, some try to rev up their innovation cultures by rubbing shoulders with entrepreneurs, and others seek financial windfalls in picking the next breakout company.
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