Pi Capital, the UK investment group made up of high net worth individuals, has led an investment of £3.1m in FlightStore, a Brighton-based firm offering interactive shopping on long-haul flights.
Pi Capital put up £948,000, Matrix Private Equity £750,000 and other investors, including the Yeoman Investment Trust and Talisman First VCT, came up with the remaining £1.3m. Previously, FlightStore had been financed by its founders. Clive Dolman, a Pi club member, will represent the investors on FlightStore’s board.
FlightStore aims to redress the lack of shopping opportunities on long-haul flights, a glaring gap in the market. So far, few companies have tried to take commercial advantage of the entertainment systems on the back of aeroplane seats. The company estimates that by 2006, 400 million passengers will fly on long-haul aircraft which are suitably equipped for its in-air offering.
But the main competitive threat to FlightStore comes from standard internet shopping. “FlightStore’s main competitor is the internet in the air,” said James Benfield, who led the investment for Pi Capital. “And that is a long way off – it needs satellites.” Internet services are available above the US, but Flightstore focuses on the transatlantic market.
However, unrestricted internet access is unlikely to prove popular with the airlines themselves, which want full editorial control of their media. “Airlines are becoming more and more brand conscious,” said Benfield. “In the past, they have been known to censor the newspapers available on planes. FlightStore can tailor itself to each individual airline’s needs.”
Airlines also stand to gain financially from an agreement with FlightStore. “They get a cut of the transactions,” said Benfield. “They will also potentially be able to reduce the amount of goods they have to push around on trolleys.”
FlightStore’s prospects are good. Its founders have strong links to the airline industry. “It has a good management team, which is what we have invested in,” said Benfield. He hinted that Pi could exit the company through a trade sale. “Who knows?” said Benfield. “But it might possibly be an attractive buy for one of the duty free players.”
Pi Capital is an unusual investor. Instead of the classic fund structure, it consists of a network of private investors, who add value in the form of dealflow, contacts and expertise as well as stumping up the cash.
According to Christopher Powles, Pi's managing director, such clubs are set to multiply. He says they have the support of the UK government, which sees early stage investment in high growth companies as a central to future prosperity. However, in an interview with PEO, he warned that despite the government's best efforts, heavy regulation remained a obstacle to such clubs. Click here to hear the full interview with Christopher.