On October 15, the International Air Transport Association (IATA) and private equity and venture capital firm Travel Capitalist Ventures said they were launching an investment fund for startups: the NDC Innovation Fund.
Since then, the fund has received 10 applications via the fund's website, and "they're all promising", according to the fund's representatives.
The NDC Innovation Fund plans to invest in small- and medium-sized companies, such as travel content, travel e-commerce sites, travel hubs, travel technology companies, travel apps, and software-as-a-service firms.
The startups have to be working on technical solutions that use IATA's New Distribution Capability (NDC) standard, or next-generation, XML-friendly, airline content distribution solutions.
At stake is early-stage capital investments of between $500,000 and $1 million. The fund invests in exchange for equity and for revenue share arrangements. It provides capital and also precious introductions within the industry.
To learn more about the new fund, we spoke with its backers.
They say that the NDC standard enables more communication between airlines and agents than before, and that the industry needs applications to support that distribution. IATA is hoping applications are developed across the value chain.
Abrar Ahmad, a partner at Travel Capitalist Ventures, said:
It's not just an airline-focused fund. Instead, we support startups working on the distribution of hotel, rental car, cruise, tours-and-activities products, a travel publisher, a transactional website, too.
IATA is not producing standards for non-airline verticals, but you can apply the standards to the air component. For instance, a tour company could update its air component to take advantage of NDC-capable distribution.
You can use the standard to streamline the handoffs from the person coming in (who the passenger is, what flight they are coming in on) and to determine what ground transfers may be needed.
There are B2B applications as well, in terms of managing corporate travel rules and connectivity among booking systems and CRM packages and applications to mobile, too.
Let's say you are a travel agent with an expertise in destination weddings. If I'm based in Los Angeles, I just want the offers applicable to me and my client.
Or say have offers initiated from the airline, such as a group discount on a particular route from LA. There are tools your agency will need to parse all of that information and get it to the agents in an actionable format.
Or say you're a large travel management company (TMC) and you have agents on the phone doing bookings and you have corporate clients.
NDC enables you to support bookings better because you know more about the passengers and what rules they are affected by in an automated way.
Startups don't understand how NDC standards can be used by them to increase engagement, conversion rates, and revenue in their products. We can help with that.
We want to use our technical resources to help startups see whitepapers, data, test functionality and appreciate the opportunities. We want to make it clearer what messaging comes in and what messaging goes out in a way a technical co-founder could understand.
Companies that participated in the pilots for NDC are extremely unlikely to be considered for the fund, said Douglas Lavin, the VP external relations at IATA and a key member of the NDC Innovation Fund Investment Committee.
The fund is looking for small companies, mainly startups, to bring them in the fold. The fund will consider medium-sized companies in funding a particular application, but the focus is smaller ones.
The participants in the pilots were established airlines, travel agencies, and technology companies, that are all well capitalized and already have lots of industry connections. Those factors disqualify them.
The fund says it will announce its investments as they are made and that the first ones will be in about three months' time.
Where's the API?
While the schemas are there for developers to build products around, few things tantalize developers as much as having a live API to play with and do calls around. There's no API yet, but the fund aspires to make ones available.
Here are some ways that NDC can be used. (But turn the volume down on the absurd Musak.) The OTA example is at 0:48. The TMC example is at 1:17. Corporate travel buyers are at 1:41.
And this is an NDC Demonstrator on how, in an NDC-capable interface, there is richer data: