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Thursday, Feb 22, 2024

Lab Gives Startups Direct Route to Airport

A small crowd filed in between the baggage claim and ticket desks at the San Diego International Airport. It wasn’t part of the airport’s annual Thanksgiving rush, but arrived instead to watch five startups deliver their pitches.

The Airport Innovation Lab hosted the companies for 16 weeks in an effort to find ways to improve air travel. The 3,500-square-foot space functions as its own miniature terminal, with a small baggage carousel, and ticket and gate counters that the startups can put to use.

The incubator first opened in 2016, thanks to a vacancy at the airport’s former commuter terminal. At the time, the airport was looking for ways to improve its customer experience, said Rick Belliotti, director of innovation and small business development for the airport.

“The convergence of miracles happened. At the same time that we were thinking about the innovation lab … the aircraft got moved out so the space was freed up,” he said. “We had a unique opportunity that many airports probably wouldn’t have had at that time. We were able to truly create a small terminal.”

Making Connections

More important than the space itself is the experience and connections the companies gain during the 16-week program. Startups are paired with mentors, and have the opportunity to work directly with the airport and its partners, gaining valuable feedback on their products and exposure to the thousands of passengers that pass through daily.

The program has already led to one success story in AtYourGate, the first startup to go through the Innovation Lab. The San Diego-based food delivery app for airports expanded to Newark Liberty International Airport, and is set to launch at three more major airports by the end of the year

“That is exactly what we wanted to see from this model — to have it expand out from our airport to multiple airports and really impact the industry,” Belliotti said.

Lessons Learned

As the first graduate of the program, AtYourGate president David Henninger said it helped his company get an “in” with the industry. When he first started AtYourGate back in 2015, he pitched the idea to 25 airports.

“They all said we love it, go try it somewhere else, and come back and tell me how it goes,” he said. “We realized quickly we didn’t know squat about the airport. There are some very unique nuances about operating inside of an airport.”

After winning a bid through the San Diego International Airport, AtYourGate was able to launch at its first site.

“It’s gotten us into other airports,” Henninger said. “Once you establish a business in an airport environment and people see it, it becomes less risky.”

Aside from giving his business its initial breakthrough, he said the team at the airport helped him work through more nuanced problems. When AtYourGate first sought to partner with another food delivery service app, the Innovation Lab advised the company to launch under its own brand to avoid confusing consumers.

Henninger said the team also pushed him to offer preorders through the app that could be delivered to busy travelers once they reach their gate, and to think through the little details, such as how they would keep food warm when making deliveries between terminals.

“They knew a lot about the traveler and the travel experience,” Henninger said. “They were really great in helping us as a partner. They weren’t afraid to push back on us.”

To date, AtYourGate has raised $2 million in seed funding from local, student-led investment fund Triton Funds, and is in the process of raising a pre-series A round to fund its expansion to more airports.

“I want to make these guys proud. They put a lot of mental and personal energy behind us,” Henninger said. “I’ll never forget that.”

The Next Cohort

Bolstered by AtYourGate’s success, the Airport Innovation Lab began picking companies for its first cohort of startups, focused on improving the customer experience. Two of the five companies were from San Diego, with parking and baggage solutions.

“It’s very hard for innovative companies to get into the airport space,” Belliotti said. “We’ve created a way for companies to be able to engage our industry that they never really had before.”

Belliotti had originally envisioned the program would include 10 companies, each ranging from 50 to 200 people. Instead, it ended up with five companies, with the smallest at two employees and the largest at 450.

In exchange for access to the incubator, and the opportunity to partner with the airport, startups can and offer a share of their revenue for the next five years. The most recent cohort contributed between 1 percent and 10 percent. The incubator does not take equity.

Looking for New Ideas

Next year, Belliotti plans to open applications to all types of companies, not just ones focused on customer experience. Essentially, Belliotti said, he wants startups to tell the airport “what we don’t know.”

“The first batch, we knew exactly what we wanted,” he said. “We’re creating a new process to allow people to bring new ideas to us.”

The next round of applications will close on Jan. 11. The incubator program will start in March.


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