Thayer Ventures

In an interview with StartupCity, Chris Hemmeter, managing director of Thayer Ventures, discusses the evolving travel industry and the rise of tech startups in the travel and hospitality sector.

What are your roles and responsibilities at Thayer Ventures?

I founded Thayer Ventures in 2009, and I am in the critical leadership role overseeing our investing strategy. Additionally, I am responsible for managing strategic relationships with our corporate limited partners and strategic limited partners. Leveraging my experience as a founder, I actively engage with our diverse portfolio companies, providing guidance in areas like business development, sales, and overall strategies.

What is your perspective on the evolving landscape of the travel and hospitality industry?

The travel and hospitality industry presents a fascinating landscape due to its significant scale as a multi-trillion dollar global sector. Historically, this industry has been resistant to technology adoption, but this trend has been rapidly changing over the past few years, further accelerated by COVID-19.

The pandemic exposed the lack of agility and responsiveness among major travel suppliers, including airlines, hotels, tour operators, cruise ship operators, and rental car companies. Consequently, there has been a notable surge in the industry's interest in adopting innovative technologies to enhance operations and customer experiences. This has created an environment ripe for experimentation, testing, and startup opportunities.

The emergence of digitally-savvy Millennials and Gen Z travelers who readily embrace self-service and automation has also reshaped the perception of technology integration in the hospitality experience. Exciting opportunities are emerging in various areas, including payment solutions and loyalty programs, offering a wide range of avenues for innovation and growth. Travel and hospitality startups are able to capitalize well on these dynamics.

How are you positioned in this space as a venture capital firm?

We distinguish ourselves in key ways, which firstly includes maintaining a laser focus on the travel tech sector. Secondly, our firm was built with the core principle of delivering genuine value to the companies we invest in. This entails providing comprehensive support in areas such as providing business opportunities, driving sales, shaping business development strategies.

In addition to our investment team's extensive expertise in the travel domain, we have successfully attracted strategic investors to our funds, including some of the world's largest hotel and transportation companies. This positions us as a strategic bridge between these industry giants and the startups seeking access to these valuable customer bases.

What factors do you look for when investing in a company?

When evaluating potential investment opportunities, there are many factors that weconsider. While these may align with typical criteria, they hold significant importance in our decision-making process.

Firstly, we assess the dynamics of the target market. There are numerous sub-segments within the industry and it is crucial for the companies we invest in to have the potential for substantial growth.

A fundamental aspect of our investment thesis is a strong focus on product and its ability to solve real problems effectively. We evaluate the complexity and significance of the problems being addressed and assess whether there is genuine demand and priority for solutions in the market that resonate with customers.

We also closely scrutinize the unit economics of potential investments. We seek companies that can achieve efficient growth without requiring exorbitant amounts of capital. Coupled with a well-conceived go-to-market strategy, sound unit economics provide a solid foundation for sustainable growth.

The team behind a company is also of utmost importance. We prioritize the quality and dynamics of the team. We seek individuals who are coachable, intellectually rigorous, and driven by an unwavering passion to solve the identified problems. This dedication is particularly crucial during challenging periods when most people would consider quitting.

Finally, what sets us apart is our commitment to adding value beyond capital. Once we have ensured alignment with the aforementioned criteria, we assess our ability to contribute meaningfully to the company's growth.

Do you have any advice for your peers in the industry?

In today's business landscape, it is crucial for entrepreneurs to access potential investors through referrals rather than relying on cold emails. Resourceful entrepreneurs who can creatively secure introductions demonstrate their problem-solving skills and determination.

Entrepreneurial success often requires taking multiple attempts. It is important to fail fast and avoid becoming trapped in underperforming companies. Entrepreneurs should set realistic goals, ensure stakeholders understand the risks involved, and be willing to shut down ventures that are unlikely to succeed. Taking high-risk investments requires careful consideration to protect both the entrepreneur and investors.