AirAsia funds US startups to enter Southeast Asia

-A Monitor Report 16 Mar, 2019 | 50 Views | - +
Kuala Lumpur : Malaysian budget carrier AirAsia Group launched a venture capital fund in the United States to invest in startups see-king to enter or expand in Sou-theast Asia, announced on March 4.

The fund, called RedBeat Capital, will focus on post-seed-stage startups in travel and lifestyle, financial technology, artificial intelligence and cyber security.

AirAsia is partnering with San Francisco-based 500 Startups, which invests in young fast-growing companies.

RedBeat Capital will have a base in San Francisco and access to 500 Startups' deal flow, AirAsia said.

"The airline group has initially allocated about USD10 million, and the fund has already invested in a couple of companies," Aireen Omar, Deputy Chief Executive, AirAsia said.

AirAsia, which pioneered budget air travel in Asia, is broadening its reach to include a payments company, logistics, food and beverages brands and a loyalty programme.

A year ago, it placed these lifestyle assets including the BIG Loyalty scheme and a Wi-Fi service, in which it typically has stakes of 80-100 per cent, under RedBeat Ventures.

The new fund RedBeat Capital will house smaller investments in startups of anything up to around 20 per cent, Omar said. Together, these could be listed separately in future.

"We don't have a timeline (for a listing) yet because our focus is to build a business fast," she said.

AirAsia has been trying to re-invent itself as a travel and technology firm to exploit data and offset cyclical volatility in airline earnings.

The group last week posted a fourth-quarter net loss, its first quarterly loss in over three years, citing higher fuel prices and lease costs.

Non-flying ancillary revenues currently make up about 20 per cent of group revenue.

The digital drive can improve ancillary revenues by using machine learning to better understand consumer trends, Omar said, adding that investments via the new fund should also help the core business.

"I would imagine that with what we are building here, the ancillary part will be increasing to more than 20 per cent - it is not impossible for it to reach 50 per cent at some point in the future," Omar said.

Southeast Asia, with a young population and more internet users than the United States, but relatively little exposure in Silicon Valley so far, is among the fastest-growing tech markets, according to 500 Startups.

"We have noticed our own partners turning an eye toward Southeast Asia. It seems like a greenfield," Christine Tsai, CEO, 500 Startups, said.

Some network carriers such as Singapore Airlines are also ramping up investments in digital technology.

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