While the travel industry has been weighed down by discounting and deal-hunting, the largest venture capital investment in travel in the U.S. last year went to XOJET, a private-jet service, according to a new report.
Documenting the top 10 venture capital investments in the U.S. in 2009, a PriceWaterhouseCoopers and National Venture Capital Association report identifies XOJet as tied for the fifth largest venture-capital recipient in 2009 at $100 million -- and the only travel company in the top 10.
Twitter was the fourth largest VC investment of 2009, edging out the investment in XOJET by $200 [i.e. two hundred dollars] at $100,000,200. The top VC investment -- some $286 million -- went to solar energy equipment manufacturer Solyndra.
In October 2009, XOJET attracted $100M in equity and a $370M debt facility in financing led by TPG and OCL, an Abu Dhabi-based investment fund. TPG's travel industry investments have included Sabre, Hotwire, America West Airlines, Continental Airlines, Midwest Air Group, Ryanair and Tiger Airways, among others, and TPG currently is involved with American Airlines in its bid to invest in JAL.
No, just because TPG has ownership in Sabre and XOJET, this does not mean -- I don't think -- that Sabre chairman and CEO Sam Gilliland hops private charters on a routine basis for conference speaking dates. So, lay that potential rumor to rest.
XOJET says it is using the funding infusion "to expand its operations to meet the growing demand for quality business aviation services and low-risk, top-quality, cost-efficient alternatives to fractional ownership."
Founded in 2006 and having raised $3B to date, XOJET claims to have introduced a new model -- transparent pricing -- for charter jet service with rates starting at $12,000 on more than 15,000 routes. XOJET's CEO, David Siegel, is a former CEO of US Airways and had executive stints at Northwest Airlines and Continental Airlines.
XOJET also touts an advantage in the efficiency of operating one aircraft class, super-midsize jets. XOJET operates the Cessna Citation X and the Bombardier Challenger 300.
The National Venture Capital Association report shows that 2009 was a very tough year for tech start-ups as the amount of VC money thrown into technology companies was the lowest since 1997, according to The New York Times.