Skift Take

We keep waiting for conclusive proof that accelerators aren't just kindergartens for entrepreneurs. But the early word from easyJet and Founders Factory is upbeat.

About 15 months ago, easyJet took a stake in the Founders Factory “incubator and accelerator,” a half-year boot camp on how entreprenuers can take early-stage businesses to the next stage.

The UK-based airline agreed to make an undisclosed, “multi-million pound” investment over five years in the London accelerator.

On Wednesday Founders Factory revealed the next travel startups it has accepted: WeTrip, a group travel booking startup based in Tel Aviv; Car and Away, a UK-based peer-to-peer car sharing community that has a focus on airports; FlightSayer, a Boston-based startup that predicts flight delays and has received a $1.75 million grant from NASA for its technology, and TrustedHousesitters, an international pet care network.

First Graduating Class

Last spring, two travel startups joined: Flio, a mobile app for navigating airports worldwide, and LuckyTrip, a budget-based itinerary recommendation service.

“We’re currently working with both LuckyTrip and Flio to integrate parts of their products directly into the easyJet App,” said James Millett, easyJet’s director of marketing, digital, and brand. The integrations of travel inspiration content and specific in-airport retail offers are due by mid-year.

The content deals are not exclusive. Flio has deals to add its content a few other airlines’ apps, for instance.

Last autumn, Flio received an undisclosed “seven-figure” seed round, led by airport management company AviAlliance after leaving the accelerator, it said.

Founders Factory declined to speak about its financial terms for any individual startup. But it said it typically provides about $41,000, or £30,000, in cash. Ordinarily, it uses a convertible loan note that converts at the company’s next fundraising for an equity stake of 3 to 10 percent.

To outsiders, it may seem strange that Stephan Uhrenbacher, the founder of Flio, would have signed up for an accelerator. He’s a serial entrepreneur who founded Qype, which he built into Europe’s largest local review website and sold it to Yelp in 2012.

“Business development can be hugely difficult for a small company trying to crack large corporations,” Uhrenbacher said. “The Founders Factory’s model made it possible to connect with top executives at easyJet and retailers like L’Oréal in a way that would have been harder to otherwise.”

Over at LuckyTrip, CEO and co-founder Tiff Burns agreed. “Corporates are generally slow to innovate, and startups struggle to scale without corporate support, so Founders enables the matchmaking to happen.”

Burns plans to nearly double its team of eight full-timers and a few part-timers by the end of the year. Then the company will likely seek a Series A financing.

This year the company plans to release a second version of its app and release versions for Android and the mobile web, launch in new markets, and debut a new product along with completing the integration with easyJet.

LuckyTrip had an undisclosed seed round before it entered Founders Factory that was led by angel investors with travel industry experience.

Burns said its booking tool on its mobile app gives no favor to easyJet in its results and that it is in talks with multiple travel companies about partnerships. He claimed it has “hundreds of thousands of users, a large number of whom are active.”

Hope for Innovation

With these investments, easyJet is tracking the paths of three other airlines investing in startups and the programs that mentor them, namely, JetBlue with its JetBlue Technology Ventures; El Al with its participation in the Cockpit Innovation Hub; and British Airways’ parent company International Airlines Group, which participated in the Hangar 51 accelerator.

More than a dozen travel startup incubators and accelerators, backed by some of travel’s best-known companies, have popped up in the past few years. The early word, which is hardly surprising, is that picking startup winners and helping them sign deals is harder than it looks.

Business schools have yet to publish studies showing persuasively that accelerators and incubators have the Midas touch.

But the trend is strong regardless. See Skift’s Travel Megatrends 2018: Mergers and Acquisitions Focus on Strategic Innovation.

“Unique” Model

Founders Factory tries to rise above the mob. It was co-founded by Brent Hoberman, who was was one of Skift’s European Tastemakers of 2017. As we noted, in 1998, Hoberman co-founded travel booking site Lastminute and took the company to a $1.1 billion sale in 2005 to technology company Sabre.

Hoping to help entrepreneurs skip the avoidable mistakes he made, Hoberman and another of his Lastminute co-founders, Henry Lane Fox, created this accelerator program.

The airline chose to back the program as a filter for vetting potential strategic partnerships.

EasyJet has already cut a deal with TrustedHousesitters. The airline’s desktop browser and mobile website will link to the paid membership service as an information resource for passengers. The goal is for select easyJet customers to get the opportunity to find free accommodation as a house sitter when booking flights.

“The Founders Factory connection worked for us because they provided a great route in to commercial partnerships like this one with easyJet,” said Tim Lyons, managing director of TrustedHousesitters.

“EasyJet wants to change its organization and to encourage internal innovation and to make sure it is staying up to speed on the current trends,” Lane Fox said. “We have easyJet employees of all levels in our offices interacting with the startups regularly.”

Lane Fox said Founders Factory aims to get better results than the typical accelerator or incubator in two ways. “It is a bespoke, hands-on model for an accelerator and not a routinized, arms-length program.”

“We have hired full-time about 50 people who have proven experience in different things that different startups need,” he said.

“We analyze what is the most critical problem an entrepreneur is facing and then match them with someone with expertise in having solved a similar problem, whether it is in business development or creating scalable IT architecture or creating brand marketing campaigns or raising funds from strategic venture capital.”

“We expect superior results over accelerators that just have generic programs and drop-in mentorship,” he added.


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Tags: corporate venture capital, easyjet, founders factory

Photo credit: Bala Chandran and Hamsa Balakrishnan are co-founders of Flightsayer, a travel technology startup that has been accepted into the Founders Factory accelerator program, which is backed by easyJet. Founders Factory

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