Asian low-cost carrier AirAsia wants to germinate a "travel technology ecosystem" through a venture capital fund in partnership with San Francisco-based firm 500 Startups. AirAsia is developing the fund through its digital venture arm, RedBeat Ventures, and will help startups enter or expand into Southeast Asia.
The startups will benefit from AirAsia's customer base, which stands at about 90 million passengers flown each year, as many startups' early losses derive from the expense of customer acquisition, AirAsia Group CEO Tony Fernandes said. "There is are so many great ideas that can use our data and brand," he said. "We're hoping this will help us in transforming ourselves from an airline into more than an airline. We're trying to build a larger business than just moving people from A to B."
500 Startups CEO Christine Tsai said Southeast Asia is a lucrative market for startups, as it has more active Internet users than the U.S.
The fund will focus on, in addition to travel-focused startups, companies that can help improve AirAsia's product—voice technology, for example—and companies that can help reduce costs through improved logistics or payment methods, Fernandes said.
Investments also could help improve AirAsia's offering to the corporate market. AirAsia already has significant business travel demand, particularly in markets where it has high frequencies and can offer single-day round-trip where use of a full-service carrier would require an overnight stay, he said. "It is a market that we are going to get into, and with data and technology, we could form a better product. [Corporate travelers] usually go through travel agents and all those things that we're not so good at, so that's definitely a space we're going to get into."
Fernandes said the fund would be as big as needed and that between $10 million and $12 million has been invested into ventures so far. This is not AirAsia's first foray into tech development, however. The carrier developed the AirAsiaGo website in a joint venture with Expedia and turned its stake over to Expedia for $60 million last year.