Preparing For Takeoff: What Startups Should Know

(Part 1: An Investor’s Perspective)

Raj Singh
Raj Singh
Oct 24, 2019 · 7 min read

The travel industry is one with large barriers to surmount — it’s heavily regulated and has several incumbents with large competitive moats. It takes a lot of perseverance, capital, and perhaps a bit of luck for startups to break through.

Preparing For Takeoff: What Startups Should Know

Venture firms traditionally invest in less than one percent of all the startups they review, and JetBlue Technology Ventures is no different. However, as a corporate venture capital (CVC) arm, we evaluate startups not just as an investor pursuing financial returns, but also as an operator and a potential customer seeking business improvements. That gives us unique perspective and value when reviewing and partnering with startups looking to improve the future of travel.

Here are some of our insights and tips for early-stage founders seeking funding, whether you are already involved in the travel and hospitality industries or are interested in expanding into them.

Do your homework

  • Know the firm’s thesis. For example, JetBlue Technology Ventures doesn’t invest in technologies, we invest in solutions for the travel industry. Technology may power those innovations, but we don’t invest just for the sake of the technology. We invest where we can make a difference and actively help due to our position in the industry.
  • Know their focus areas. At JTV, we have five focus areas for investments and are interested in ideas improving the entire travel ecosystem and end-to-end journy, not just aviation. Be sure that whatever you’re working on makes sense for that investor’s portfolio.
  • Know their track record. You need to know if a potential investor has already made their bets in that space. Typically, though not always, investors do not fund competitors to existing portfolio companies. If your startup is similar, but not competitive, be ready to explain the differences.

Connect the dots

And remember the power of scarcity. Exclusivity matters! Run your process carefully so that investors you want to be in the round feel like they have to move quickly. When you connect the dots effectively, you’ll build urgency around your raise and being a part of it. That’s a powerful place to be as a founder raising money.

Timing is everything

Orient your calendar according to the rhythms of investors. If you start at the wrong time of the year, people might ask how long you’ve been fundraising. You don’t want to indicate that the process is taking too long. When you start getting serious interest, that’s when we’d suggest starting the fundraising clock. Six months is a good number (three months is a great number), which means that the ideal time to start your raise is in the first or third quarter of the year. You can raise money in that compressed window where attention is high and deals are getting done, if you have built relationships.

Be patient and build relationships

Ask investors if you can send them updates about your progress — and then actually do it! Send quarterly one-pagers that highlight progress made and problems overcome. Share new hires, favorable press mentions, and key milestones. If you’ve recently pivoted, explain how you listened to the marketplace feedback and adjusted accordingly. Then, once you’re ready to raise a round, you have built relationships such that the people are already familiar with the story and you will now be pitching on the progress made versus the idea itself.

A quick side note — relationships might not lead to direct investment, but they may lead to the right introduction. An investor’s network is his or her filter, and a warm introduction from a trusted peer carries weight.

Understand the operator mindset

If your startup can help JetBlue reduce cost, increase revenue, enhance safety or improve customer service, that could be a compelling narrative for us at JetBlue Technology Ventures. A hidden part of the cost ‘iceberg’ is maintenance and operations — if a startup can help improve margins by just half a percent per year, then that creates huge value. Since the average global airline makes less than $10 profit per passenger per flight, any margin improvement has major impact.

Another value that a CVC brings to the table is the strategic perspective of the industry. Having one or two strategic investors in a round is typically a win-win for you and for the financial investors on the cap table.

Understand the investor mindset

The same can be said about growth rates or product road maps or anything else that makes it into a pitch deck. Things change. Pivots happen. Avoid over promising because that leads to underdelivering. Be thorough, thoughtful, and intentional when pitching and you’ll come off as an expert. (If you want to highlight the upside case, include a set of scenarios rather than just one). Travel-savvy investors are aware of how the market buys (cautiously, mostly) and will factor that into your metrics.

Lastly, venture capital tends to be a cottage industry where partners often work independently. Travel investing is even more niche. As a startup, you need to think about how individuals invest and how you can help them reach their goals, just as you would for your own customers. Most investors have a target ownership level or target check size, and may also have a standing policy about leading a deal or not.

A few final words…

All money isn’t equal. Investors should add more value than just money — they should make introductions to potential prospects and customers and provide valuable advice during good times and bad. Our team at JetBlue Technology Ventures guides our portfolio of startups to help them understand the broader industries so that they can move faster, access more opportunities, and make fewer mistakes.

You want to stack the deck in your favor with experienced, well-connected partners that can amplify your progress. A great stable of investors are accelerants to a startup’s success, especially within an industry that is as complex and fragmented as travel.

Raj Singh is head of investments at JetBlue Technology Ventures. To learn more about JTV and our investment focus, please visit our website and sign up for our weekly newsletter here.

If you have a solution shaping the future of travel, we want to hear from you! Apply for funding here.

JTV Insights

The official blog of JetBlue Technology Ventures, highlighting our latest thoughts on emerging technologies and travel innovation.

Raj Singh

Written by

Raj Singh

Managing Director, JetBlue Technology Ventures

JTV Insights

The official blog of JetBlue Technology Ventures, highlighting our latest thoughts on emerging technologies and travel innovation.

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