Entrepreneurs developing travel technology startups face not just an industry dominated by giant companies running on old, patchworked IT systems, but also present-day problems in getting access to complacent customers and patient investors.

Help may be on hand for some, with the launch of a new venture capital fund investing solely in travel tech enterprises. The planned venture fund with up to $150 million available, due to having its first closing in June, is organized by Thayer Ventures, which focuses on travel technology.

The new fund plans to raise capital from a mixture of strategic investors (such as suppliers, middlemen, and other industry players) and financial institutions, including pension funds and endowments.

Participants in the fund haven’t been confirmed or finalized. But the venture firm has attracted interest among large players in travel.

Its annual conference, held Thursday at a Ritz Carlton in San Francisco, featured appearances from development executives at Amadeus IT Group, BCD Travel, Choice Hotels, InterContinental Hotels Group, Priceline Group, Marriott, Microsoft, Sabre, SAP and also SAP’s Concur, and Salesforce.

Some corporations may prefer to invest indirectly in startups via vehicles like Thayer’s because identifying winners can be time-consuming. Plus, from their perspective, startups can find it difficult to be acquired if one of their investors is a competitor of the acquiree.

So-called strategic investors may prefer to have “a window into Silicon Valley” by being an investor in a fund like Thayer’s, where corporate development officers can learn what technologies are hot and get insights into market trends without direct exposure to investment risk.

The new fund — Thayer’s third — will be the firm’s largest to date.

Chris Hemmeter, managing director, tells Skift that the firm’s second fund has “been a home run.” It has generated high returns, making it “a high top quartile fund, or maybe even top decile fund, depending on how you measure its performance.” Its first fund has “excellent” performance, too, he says.

Critics may say that few of the companies in its previous two funds have had knockout exits since the firm’s founding in 2009. Among the exits was Hipmunk, which sold in 2016 to SAP Concur. The parties didn’t disclose the amount and it is believed to have been for less than the $54 million raised from multiple investors. (SAP has not revealed the transaction size because the size didn’t meet the disclosure threshold required of a public company.)

Hemmeter says that his firm focuses on long-term plays. “Enterprise software has a slow build,” he says. “It doesn’t grow in a hockey stick pattern like Facebook or Snapchat. It involves a long gestation, as small and medium players nibble at it before the large players adopt the technology. Still, the valuations can be extremely high and prove themselves to be good investments.”

Hemmeter says the newest fund will formally be stage agnostic, “though Series A is where the biggest returns are.” He says that data from Cambridge Associates and other fund trackers suggest that funds under $200 million in size significantly outperform larger funds, on average.

At that sub-$200 million level, smaller bets are possible, as a fund doesn’t feel pressure to make, say, $20 million investments to place investor money efficiently, according to Leland Pillsbury, the firm’s newly added managing director.

If the new fundraising is successful, Thayer will be able to write larger checks than in the past. It aims to be the lead investor and to take board seats in about 90 percent of its portfolio.

What will Thayer do differently based on its lessons learned? “It’s the deals you don’t do that drive returns. We’re super sensitive to the total addressable market a startup can tap into. That doesn’t mean we wouldn’t do a niche investment, but, man, that impacts price and how much capital that goes into a round.”

Are consumer-targeted startups off-the-table? “No,” says Hemmeter, “but there’s a truly high hurdle. We’ve invested in Sonder, a company that helps professionalize alternative lodging, in an earlier fund. Consumers are eating Sonder’s services.”

“But it doesn’t have to compete with Priceline or Booking.com or Airbnb for travel keywords in search engine marketing,” says Hemmeter.

“But if a startup depends on popping up in general travel search to build up a consumer base. What happens is, everyone always gets 30,000 registered customers. Because it’s the law of large numbers, there are a lot of people in the world. But then their cost to acquire new customers keeps rising.

“I feel bad for those guys, those poor founders who are stuck in zombie companies. That is ultimately the worst fate. It’s worse than a big flameout. To have a decade of your professional life lost is terrible when you compare it to failing fast. Better to fail fast a few times. It’s all about playing the percentages.”

Photo Credit: Lee Pillsbury, the firm's newly added managing director, uses a Ferrari racetrack drive he recently took to make a point, while Thayer Ventures founding partner Chris Hemmeter looks on, at the investment firm's annual conference at the Ritz Carlton on Stockton Street in San Francisco. Sean O'Neill