The International Air Transport Association is looking for a new financial partner after Travel Capitalist Ventures announced it is pulling out of a fund to back NDC-related projects.
The pair launched the New Distribution Capability Investment Fund (NDCIF) in October 2014, with a $5 million wallet to support companies working on the distribution of airline, hotel, rental car and cruise products.
The fund planned to invest in small- and medium-sized companies, such as travel content,ecommerce sites, travel hubs, travel technology companies, travel apps, and software-as-a-service firms, working on technical solutions that use IATA's New Distribution Capability (NDC) standard.
Almost 18 months on and TCV has decided to leave the initiative, claiming a deterioration in "global economic and marketing conditions affecting early stage investments".
IATA has admitted that despite receiving 70 submissions for the fund by October last year, no investments have been made to date.
A previously announced deal to fund the Executive Travel App (known as ETA) fell through as TCV was "unable to meet its financial obligations under the agreement".
IATA would not disclose when the decision was made to axe the ETA investment.
Abrar Ahmad, a partner at TCV, says initiatives such as NDCIF "are not immune from these macro conditions".
"It’s my first time witnessing such broad rapid change for the worse when it comes to the early stage portion of our investment mandate. This too shall pass unfortunately these conditions are here to stay for now.
"I wouldn’t confuse the macro level economic and capital markets problems with the NDC Standard itself; they’re two separate areas of focus and purely an example of investor and capital sentiment for early stage funding at this point in time."
The 70 submissions that the NDCIF received were "promising", Ahmad says, but were often "idea stage companies (the proverbial founders with a new idea and an investor deck) looking to build an alpha version of their product to qualified companies with traction, product market fit or revenue".
"Unfortunately early stage investor sentiment has drastically changed for the worse in the past two fiscal quarters (in some markets investor and LP sentiment is approaching 2008 level conditions).
"And you see this in articles from the WSJ, to one on one discussions with investors and founders in Silicon Valley, China, Dubai and S Africa and the internal guidance investors and incubators in these markets have expressed to their portfolio companies about ‘trimming the fat’, drastically lowering expectations and postponing any capital raising."
IATA's director for the NDC Program, Yanik Hoyles, says the organisation remains "strongly committed to NDCIF" as a way of promoting innovation on the NDC standard, and is now seeking a new financial backer for the project.
NB:Piggy bank image via Shutterstock.
