Airbus, the European aerospace giant, is planning to build three unicorn-scale startups a year, spinning out some of the non-core technologies developed in its R&D labs and turning them into independent, VC-backed businesses.
The new company-building unit will be called Airbus Scale, and comes as part of a big reorganisation of Airbus’s innovation activities.
The move is similar to BP’s project to build five unicorn-sized ventures within its BP Launchpad unit, and comes as part of a bigger trend by large companies to innovate not just by partnering with startups but by creating their own. Insurance giant Axa's venture building unit Kamet has also been a pioneer in this area.
The missing part was to make the innovations happen [...] Airbus has amazing technologies that we don't always do anything with
Airbus has been running its BizLab startup accelerator programme since 2015 without any real breakthrough success and brought in Christian Lindener as head of the unit in 2019, with a mandate for a big revamp.
“We had these intrapreneurship programmes and innovation programmes running all over the company and we said hey, let's pull them all together and see if we have everything that we need,” Lindener tells Sifted.
“The missing part was to really make the innovations happen,” he says. “We're going very deep into company building. Airbus has amazing technologies that we don't always do anything with. We are going to identify those technologies, pull them out of the company, build a team around them — hiring externally as well as internally.”
Airbus will assess on what basis it will invest in the companies it builds. If the companies are spun out, Airbus would retain only a minority stake and bring in external VC investment to scale the company up further. The aerospace company would invest in the companies directly from the balance sheet rather than through a separate corporate investment unit. (Airbus does have a corporate venture fund, Airbus Ventures, which invests in early-to-growth stage startups in the aerospace industry, but that unit will not be part of funding the Scale businesses).
Airbus will bring in external VCs to help fund the Scale companies through the scaleup stage. Lindener has been able to convince the C-suite that ownership, at whatever level, of a fast-growing business is still valuable.
The first company is likely to be launched in the middle of next year, ramping up to three a year in the near future. Lindener says he is already talking to some interested VCs.
Airbus has a name in the industry for doing stuff that works
“VCs are seeing this as a new asset class — taking projects from big corporates, especially R&D-heavy ones — and building the last mile themselves to turn them into companies,” Lindener says.
In the past VC investors have been wary of corporate spinouts, fearing that they are too tied to the parent company, limiting options for an exit, but Lindener says attitudes are changing. When it comes to deeptech startups, where the technology can be complex, VCs like the fact that the R&D has been de-risked by a corporate team.
“This is not something that has come from a university programme,” says Lindener. “Airbus has a name in the industry for doing stuff that works. For example, we have these electrification houses where you can test things like electric propulsion engines. We know how to get technology certified, especially in aerospace.”
Airbus has not specified how much it will invest in the companies it builds. The company spent €2.9bn on R&D in 2020 and is looking to keep investment at that level this year.
Rethinking accelerators and getting rid of scouts
The innovation revamp has also meant that Airbus has pared back its activity in scouting and investing in external startups.
Lindener says: “We rethought all the accelerator offices we had around the globe — these offices that were shiny and colourful, because, in the end, startups don't care about workshops and demo days. Startups need to focus on their business and they want to do business with Airbus. I needed to get them into the business fast.”
Instead of running workshops and mentoring for startups — and taking small stakes in them — Lindender and his team will focus on making it easier for a small startup to do a deal with Airbus.
Startups don't care about workshops and demo days. Startups want to do business with Airbus
“We worked a lot on the exemption processes — we have fast tracks to procurement, to get through legal. We really focused in the last 18 months on building those capabilities to really make it work,” he says.
Airbus also got rid of its startup scouts. Most of the relevant startups are found directly by the business units that need their services, says Lindener.
What tech is Airbus interested in?
In terms of what venture ideas Airbus is looking at, sustainability and zero emissions are high on the list. The anticipates it will look at around 200 topics each year and whittle these down to 20 for the Scale programme.
”The company's strategy is all around zero emissions. Climate tech is also very hot for VC. So these are two things that get heavily funded at the moment,” says Lindender.
“We have technologies that can be built into this — carbon capturing, offsetting, decarbonisation, civil aviation fuel, energy production and distribution. These are the core topics. And we have some adjacent ones — we are still working on urban air mobility and the different services being developed around it. And we have sensors, Internet of Things, big data analytics with all the flight data and weather data, for example. These are all things that, if we think about them differently, you can create a leading startup,” he tells Sifted.