Phocuswright 2023: AI takes centre stage in Florida
With the Phocuswright Conference underway, five of the Center Stage speakers have given their advice to start-ups looking to secure funding. The update comes during an event which is themed around the massive possibilities of artificial intelligence in travel.
With AI developing faster than ever, capturing the attention of investors is an increasing challenge.
Experts from JetBlue Ventures, Highgate, Rappi, Inovia Capital and Phocuswright share their two cents on what startups and innovators should be doing to stand out.
Communicate how you’re solving a problem
According to Amy Burr, president at JetBlue Ventures, it’s not about focusing on AI itself – it’s about the challenge an innovation is addressing.
“As a founder pitching in a crowded market, you should ensure that you can clearly communicate how and why your company is using AI to tackle the problem facing your industry. “While it may be tempting to reference your use of AI in your pitch, investors are more likely to be engaged by a company that understands the value or benefit AI plays in its business.”
Demonstrate your ability to innovate in a rapidly-changing environment
While the basic principles of investing are the same, new businesses need to prove that they can operate in a fast-changing environment, and demonstrate they can innovate at speed.
Kurien Jacob, manging director and partner at hospitality investment and management company, Highgate, explained: “From a funding point of view, nothing has changed for rational investors.
“The fundamentals remain the same – a great team that can execute, proven product market fit, a sizable SAM (serviceable addressable market), a clear go-to-market strategy and ability to attract future rounds of investment.
“It is also important to know if the company can innovate in a rapidly changing environment or pivot in case of competitive or external threats.
Guido Becher, global head of travel at Rappi, a tech company that connects startups with investors, added: “It’s amazing the evolution of this new generative AI technology and the possibilities that it opens.
“It’s so early to tell where the chips will fall but always remember to add real value and be flexible to evolve fast enough to not be eaten by the technology’s natural evolution.”
Prove your longer-term relevance
With AI evolving at such a rapid pace, companies need to convince investors that they will be as relevant in the longer-term future as well as the short-term.
As Jacob explains, “An established record of using AI is not important when investing in a company.
“However, founders who have the vision, approach, and drive to use AI in the future to either improve efficiency or productivity, reduce costs, improve customer satisfaction, or increase revenue or profits both internally and externally will get a higher score when being evaluated.
“On the flip side, using AI terminology as a positioning to ride the current AI wave, whilst not having any capability current or future, will be the fastest way not to be considered by savvy investors.”
Be essential, not just a luxury
With technologies changing fast and budgets tight, investors are most interested in inventions that are and will prove to be essential, and which therefore will have a broader customer base.
Luxuries aren’t going to have widespread appeal to customers, so their interest from investors will be limited.
Companies should ask themselves, what can the travel industry simply not live without?
As Mia Morriset, principal, Inovia Capital puts it: “In the race to attract investment, AI companies focused on solving major measurable issues—like labour shortages, disruptions, and optimising operations—will certainly attract the most interest.
“Emphasize that your technology is essential, not just a luxury, to directly tackle the toughest challenges in the travel industry. This narrative excites investors.”
Be as specific as possible
With AI an increasingly used buzzword, it’s no longer interesting to simply be “using AI to solve a problem”.
Tell people exactly how you are using it and why what you are doing is different from every other AI company.
Mike Coletta, manager, research and innovation, Phocuswright, advises: “Be very specific about how you’re using AI.
“Investors are keen to detect truly unique implementations and avoid smoke and mirrors, so the more you can demonstrate the right balance of using best-in-class technologies with harnessing your team’s internal expertise in a thoughtful approach, the better off you’ll be.
More than 1,300 delegates are set to attend this week’s Phocuswright Conference, where they will hear more from both investors and companies hoping to launch the “next big thing”. Mike Coletta will also launch Phocuswright’s latest analysis of how funding to travel companies has shaped up in 2023, highlighting trends expected for 2024.
Find out more about the show here.